Bakken New Wells Producing Less Confirmed

It is has now been confirmed. The first measured 24 hour production from Bakken wells is a very good predictor of the future production of that well. And it has also been confirmed that new wells with higher well numbers are producing a lot less.

In the NDIC’s Daily Activity Reports they publish “WELLS RELEASED FROM “TIGHT HOLE” STATUS” as well as “PRODUCING WELL COMPLETED”. By searching these two lists, then eliminating the duplicates that appear on both lists, we find that perhaps 70 to 80 percent of all wells report their first 24 hours of measured production.  It is listed as “BOPD” (Barrels Oil Per Day) and “BWPD” (Barrels Water Per Day). An example below, and notice the second well listed does not give any production numbers:

Producing Wells Completed

The “per day” in this case is the first 24 hours of measured production and not necessarily  the first 24 hours of preduction. I have collected, from this source, the data from 2,565 wells dating from November 1st 2013 to the present date. Enno Peters gathered data from several thousand Bakken wells dating from the early Bakken t mid 2014. Using the well numbers, I have managed to match 1,127 wells in my database with the same well number in Enno’s data. There were a more matches than this but had no data or incomplete data. But it was mostly because only a little over half my data overlapped his.

From his data I used the 2nd and 3rd months production data because the first month’s data was often for less than one full month. I converted his monthly data to barrels per data by dividing the monthly data by 30.417. There were sometimes great anomalies in the data so to smooth things out, on the first three charts below, I used a 50 well average. Here are the results. The horizontal and right axis is first 24 hour barrels. The “First 24hr Barrels” is a smooth line because that was the sort column.

24hr 1

When I sorted the data by production in the first 24 hours I found a strong correlation with the second months production. This was especially true with first 24 hour production up to 1,050 barrels. The “First 24hr Barrels” chart line is smooth of course because that is the sort index.

24hr 2

Sorting all wells by the second months production we see a very strong correlation to the first 24 hours of measured production.

24hr 3

The Horizontal axis here is the first measured 24 hours of production. The vertical axis is the devisor needed to convert the first 24 hours production to second month barrels per day.

From this chart you can see that the conversion from the first 24 hour production to the second months production is non-linear. For instance if the first 24 hours production was between 50 and 1050 barrels then we could expect the second months production to be about half that. From about 1350 barrels to 1600 barrels the first 24 hours then the average second months production would be about one third that number. Or if the from 1700 to 2200 barrels the first 24 hours we could expect the second months production to be about one fourth that number.

The average second months production was 412 barrels per day while the average third months production was 328 barrels per day. This is a drop of 84 BP/D or 20  percent from the second to third months.

Enno’s data ends mid 2014. However I collected some data of my own from July and August 2014. If you go to NDIC Oil and Gas Production Report, you find data on all wells previously brought on line. Of the 1,127 wells in this sample, 87 or 7.7% had no third month production. Probably because they had not on been line long enough. Also 16 or 1.4% had a third months production but no second months production. This means the well was shut down that month. For all months with no production that cell was was left blank rather than incerting a zero. Therefore months with no production were not counted in any average. Blanks are not averaged, zeros are.

Enno’s data ends mid 2014. However I collected some data of my own from July and August 2014. If you go to NDIC Oil and Gas Production Report, you find data on all wells previously brought on line. The data is in this format:

Data Format


If you divide “Oil” by “Days” you get barrels per day for what I presume is the first month. I collected data on 332 from this source that matches well numbers from my “first 24 hour” data base from July and August 2014. This was a very time consuming process since each well number had to be searched then copied and pasted into my Excel spreadsheet, one well at a time.

24hr 4

The right axis as well as the horizontal axis is the 24 hour barrels sort number. The left axis is barrels per day. One can clearly see that the higher the 1st measured 24 hour production the higher the daily production for the next full, or nearly full, month. We can now say, with very strong conviction, that the first 24 hours of measured production will tell us just how well that particular well is likely to perform in the future.

I think this leaves little doubt that the BOPD number that the NDIC reports in their Daily Activity Report Index is a very good guide to what kind of future production we can expect from any particular well. However I must make one important point that I should have made a month ago when I first posted on “The First 24 Hours of Production”

I can find nothing that specifically states that the figure represented as “BOPD” above actually represents the first 24 hours of production. What I do know is that it is the first 24 hours of measured production. I think it is highly likely that they waited until a lot of the frack water had been pushed out before they started to measure. At any rate, based on the data I have researched above, it is definitely a useful guide to the future production of a particular well.

Now that the connection has been firmly established, let’s look at what that data is telling us.

24hr 5

This chart is all the wells listed by the NDIC with actual BOPD data from November 1st, 2013 through December 19th, 2014. There are 2,565 wells in this sample. Of course there were a few more wells than this but their first 24 hours of production was not published by the NDIC. What you see here is clearly the first 24 hours of production declining as the well numbers increase. However the decrease did not start until we were about half way through well numbers in the 25,000s.

First 24hr production was up and down until about well number 25600 then a steady decline set in. The highest 300 well numbers are averaging just under 1,000 barrels the first 24 hours.  That translates to just under 300 bpd the second month if past first barrels at that level hold true in the future.

24hr 6

This chart shows the average first barrels per day for groups of well numbers. Below is the data for that chart along with the number of wells in each sample.

Chart Data

Wells in the 24000s were averaging 1,402 barrels of original production. The 28000 wells are averaging only 908 barrels the first 24 hours of measured production. That is a drop of over 35 percent. However there are only 85 wells with well numbers over 28000.

There are still some wells being drilled with low well numbers. Two wells are currently being drilled that are in the 21000s. And 27 wells are currently being drilled below the 27000s or below. But 153 of the 180 wells being drilled, (181 if you count the salt water disposal well), or 85 percent of wells being drilled are in the 28000s or above. 105 of 180 wells are in the 29000 or above. 3 are in the 30000s.

Where in the past, though some wells with numbers above 27000 were being drilled, the majority of wells were below that number. Therefore no obvious decline in monthly well production could be gleaned from the numbers. Only when the wells are sorted by well number does the decline become apparent. But that is all about to change because most of the choicest places have already been drilled.

It is important to remember that wells are not drilled in permit number sequence. There are always far more permits issued and awaiting the driller than wells being drilled.

It is unclear, to me anyway, whether the lower production per well is because of downspacing, moving further away from the sweet spots, or both. But it is clearly happening. Newer wells, or at least those with higher permit numbers, are definitely coming in with lower production numbers.

In 2015 we will see the squeeze coming in from two sides, fewer wells being drilled and lower production from those that are being drilled. It is my prediction that the Bakken will peak in 2015. In which month it will peak is hard to guess.

But there is a third squeeze, from another side. The junk bonds that many small shale drillers depend on for their financing are dropping through the floor. That means yields are going through the roof.

U.S. shale junk debt tumbles amid oil crunch

 HOUSTON – Prices for the risky corporate bonds that have fueled the U.S. shale energy boom are plummeting as oil prices have fallen below $60 a barrel for the first time in more than five years.

The U.S. energy-sector’s high-yield bond prices, known as junk bonds because they carry high risk for investors, have dropped 18.9 percent since the end of June to the close of trading Friday – putting the sector on track for its worst performance in returns since the financial crisis of 2008, according to Barclays…

Prices for the entire spectrum of U.S. corporate bonds have tumbled 7.7 percent since June, and are also set to perform worse than any year since the U.S. credit crunch six years ago, according to Barclays…

The sharp selloff comes as a handful of small oil companies are approaching or have exceeded 20 percent yields, analysts with Tudor, Pickering, Holt & Co. said in an investor update Monday.

Twenty percent, imagine that! How long can any driller afford to rollover any debt at those rates? With very low oil prices, less production from their new wells and the cost of new money at unheard of rates… they are sunk!

Note: This will be my last post until sometime after Christmas. If would like to get on the notification list of new posts please email me at DarwinianOne at




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441 Responses to Bakken New Wells Producing Less Confirmed

  1. Watcher says:

    Ron, gonna need some clarification.

    1) You seem to say months 2, 3 whatever correlate to first 24 hour IP. That seems intuitive. If the initial number is higher, and the decline rate is somewhat the same, then out months should also be higher. If IP is 500 bpd then a 50% decline leaves you 250, but if IP is 1000 bpd a 50% decline leaves you 500.

    2) Then you suggest it is non linear and that is where I thought it was going to get interesting . . . I thought you were saying higher IPs steepen the decline rate. Is that what you’re saying? 500 bpd gets you 50% decline to month whatever 3, but 1000 bpd declines steeper to maybe 60%?

    It’s not clear what the conclusion is being presented. Also, the laying out of well numbers, what do they correlate to? Is it purely geography?

    • 1) You seem to say months 2, 3 whatever correlate to first 24 hour IP. That seems intuitive.

      Intuitive: adjective 1. perceiving directly by intuition without rational thought, as a person or the mind.

      Good Lord no. I just plotted the data. It is what it is. Nothing was left to intuition. And I don’t seem to say anything. The data says what it says.

      2) Then you suggest it is non linear and that is where I thought it was going to get interesting .

      No I suggest no such thing. The data shows it is non linear. That is no single multiplier, or divisor, can be used to convert first 24 hour barrels per day to barrels per month or barrels per year. It is a sliding scale. That is what the data shows.

      It’s not clear what the conclusion is being presented. Also, the laying out of well numbers, what do they correlate to? Is it purely geography?

      Oh. Perhaps you just overlooked it. Here is the answer, copied and pasted from above, to both questions, but in reverse order to how you asked them.

      It is unclear, to me anyway, whether the lower production per well is because of downspacing, moving further away from the sweet spots, or both. But it is clearly happening. Newer wells, or at least those with higher permit numbers, are definitely coming in with lower production numbers.

      • Watcher says:

        Ahh, so the higher permit numbers are just lower. Nothing presumed about geography. Could be well spacing and “interference”, aka previously drained, by adjacent wells.

        “From this chart you can see that the conversion from the first 24 hour production to the second months production is non-linear. For instance if the first 24 hours production was between 50 and 1050 barrels then we could expect the second months production to be about half that. From about 1350 barrels to 1600 barrels the first 24 hours then the average second months production would be about one third that number. Or if the from 1700 to 2200 barrels the first 24 hours we could expect the second months production to be about one fourth that number.”

        This is the big deal. If they get big production on day one, pressure is down, or hell, total is down, and out years just won’t flow as well as out month output from a lower IP well.

        What’s the total cumulative over just the 3 months. Is it the same? Or does the big IP well (I hesitate to say raw open choke) produce less in total over 3 months?

      • Anonymous says:

        As a mineral rights owner in an area of the Bakken, it has not taken a complicated math analysis to understand that recent drilling (higher well numbers) has shifted to areas quite distant from the sweetspots of the Bakken (hereafter referred to as “remote” wells). Up until the start of the 2014 price drop, drilling in these “remote” areas was motivated by:
        1. the calendar (need to drill wells to hold by production before the lease ran out). Such motivation isn’t a simple matter- – because the potential of future drilling at deeper Three Forks formations, will depend on a big experiment that has largely yet to take place – – and likely will not take place until higher prices return.
        2. the fact that past high prices helped make these “remote” wells initially economically profitable in spite of their lower b/p/d production.
        3. Also, the shift in drilling to “remote” locations was in part due to NDIC restrictions on flaring of natural gas. Wells in the remote locations (being newer) were given the standard holiday from flaring restrictions, whereas old wells in the sweetspots had to be ” throttled” back in some cases.

        The Bakken long range potential (middle and three forks) is still too dependent upon future exploration of the Three Forks and upon expected future improvements of fraccing technology, for anyone to safely state that the Bakken production is in true permanent decline.

        Nonetheless I am thankful and appreciative of the painstaking analysis that has taken place to generate this discussion.


        • Thanks DOB502, we deeply appreciate the input from an actual Bakken mineral rights owner. I guess we can assume that drilling in these remote areas will now cease as they are no longer profitable.

          • DOB502 says:

            Cease – no. Significant decline is what I expect. This Bakken shale play is too complex to safely predict black and white answers. For example, while drilling in “remote” locations would generally tend to be non-profitable (if the only change was in the price of oil), there are already predictions of significant drops in the cost of drilling Bakken wells (as fewer drilling and service companies compete for fewer wells). And that helps those remaining companies who are able to continue experimental drilling in the Bakken Three Forks, to better position themselves for the day when oil prices will rise back up again. Just exactly where all this will settle out remains to be seen. In any commodity business, one bust contains the seeds of the next boom, and vice versa. Merry Christmas to all.

    • Ilambiquated says:

      I think the point here is that first day production is a good leading indicator or total production, making it a handy way to predict output.

  2. Watcher says:

    ABU DHABI (Reuters) – Saudi Arabia said on Sunday it would not cut output to prop up oil markets even if non-OPEC nations did so, in one of the toughest signals yet that the world’s top petroleum exporter plans to ride out the market’s biggest slump in years.

    • clueless says:

      As I posted before – after over 40 years of being trashed for high prices, OPEC will wait for other countries to cut production so that OPEC can say that they did not manipulate prices higher (when prices inevitably rise), they will say blame it on the US (and others) who cut production.

  3. PeCet says:

    Well done analysis. This casts shadow on the total LTO produced from this formations. EIA is clearly overestimating the potential of shale to transform world energy future. With demand rising steadily at 700k-1m bpd per year rate, existing oversupply will soon be digested. In 2016 Russia will begin its fall in North Sea-style. Iraq and Libya can make for it, but shale will be falling until then. This suggests global ultimate peak oil in 2015/2016. I bet late 2015. Now interesting thing is how many companies will cut their exploration budgets and just how constrained will the supply be in coming years.

    • Watcher says:

      Ya it is interesting analysis. I’m gonna let some other posts address it because I’m curious about the non linearity things said. Later, there were some late night posts to previous thread that were good rebuttal/thoughts to bailout discussion and will bring them over, but not yet. This IP related to out months may be a big deal worth some focus.

  4. Anonymous says:

    Fantastic post, and a very interesting read. Thanks for all your hard work and distilling data/graphs with comments. Have a good hoilday. (ha, I mispelled holiday but think it kind of fits).

  5. Sam Taylor says:


    This is very interesting, thanks. Could you maybe do a scatter plot of first 24 hours vs 2nd months production.

    Also, if you’d like I could have a word with my brother about trying to make something to automate the data collection that you’re doing. He works in that sort of area and is qualified in computer science so could probably help save you some time. If you could give a few links to the files you’re looking at and the data you’d like extracting.

    • Sam, thanks for the offer but I will just have to figure out what I am going to work on next.

      Of course Excel can do scatter plots but they just don’t make any sense to me. After I do them I have no idea what I am looking at. But I will do a little research and see if I can figure it out.

      • Sam Taylor says:

        A scatter plot of first day production vs 2nd month might give an indication of what sort of a relationship exists between the two, if it’s a linear function, how strong the correlation is between the two and so on.

        I’d also be interested to see some statistical analysis on the change in productivity with time. Without such an analysis it’s hard to say whether your conclusion about declining productivity is signal or noise. If I could have a look at your the data I’d be perfectly happy to run the numbers to try and give us a better idea of what’s going on there. I’m always conscious of trying not to torture confessions that aren’t there out of data.

        • Dennis Coyne says:

          Hi Sam,

          I did a scatter plot of 24 hour IP vs 3 month cumulative. Although the R squared is low, a regression shows the intercept and slope are statistically significant. (P-value for intercept is 6E-207 and for slope is 1E-59, t-stat is 35 and 17.)

          • Chris says:

            Denis, if 3 months cumulative output is zero, 24 hour should also be zero. I think the trend line should go through (0,0). What do you think?

            What about the same graph with data from the graph below (moving average of 100 wells 24 hour IP vs 3 month cumulative output)?

            • Dennis Coyne says:

              Hi Chris,

              I agree that makes sense and did it that way initially, but forcing a (0,0) intercept makes R squared negative (which is not intuitive), doing a least squares regression gives a statistically significant intercept and slope, this is where the data leads.

          • perfect. that’s why we use a stochastic model such as dispersive diffusion, to capture the variation in rates.

          • The well populations in that scatter plot are grouped (notice there are two distinct lobes). Both groups, when treated independently, will show zero intercepts.

            The two lobes are probably associated with something fairly global, I would try grouping them by water cut (ratio of produced water to produced oil in the THIRD month). If that doesn’t work then it may be a reservoir property issue such as the thickness of high quality mixture of shale and carbonate (??).

            • Dennis Coyne says:

              Hi Fernando,

              I try not to massage the data too much, otherwise you create something that is not there. I have very limited information about the data and how would I decide which data belongs to which group? The decision would be arbitrary, I think there have been changes over time with choking, fracking, where the wells have been drilled, and lots of things I haven’t thought of.

              • I made the remark because one of you noticed the x and y intercepts weren’t zero.

                Plus I have to confess I spent years bossing and mentoring petroleum engineers, this means as soon as I realize there’s a lot of data I start asking for lots of plots.

                Let me ask you, are you guys trying to determine if the well quality is dropping, and if so how fast?

                • Dennis Coyne says:

                  Hi Fernando,

                  Yes that is what I am looking for, I will let Ron and Chris speak for themselves.

                  • yes Fernando, we do the analysis work that you guys from the oil patch are incapable of doing — for whatever reason I am not sure.

                  • Webby, we charge for this type of work. I’m retired, and I don’t mind helping out. This site has a lot of good information. Also, I suppose you realize when we muscle up for this type of analysis we gather a lot of privately held information, which even if I had I can’t share?

                  • Fernando says:

                    “Webby, we charge for this type of work. I’m retired, and I don’t mind helping out. This site has a lot of good information. Also, I suppose you realize when we muscle up for this type of analysis we gather a lot of privately held information, which even if I had I can’t share?”

                    Do you realize how lame you sound Fernando? What is a Petroleum Engineering degree for? Do they not teach anything worthwhile in Petroleum Engineering?

                    Just imagine if someone was interested in finding out how an electrical circuit worked. Is your answer that “Us electrical engineers charge a lot for this type of information, and that it is privately held information — so sorry about not being able to share it” ? Afraid not, this stuff is taught in classes and books.

                    Ha ha, fortunately, we can figure this out without your style of “help”. The discipline is called earth sciences, and it holds to the same kind of physical laws as any other natural phenomena.

        • Dennis Coyne says:

          Another type of scatter plot with 100 well moving average, well id is on horizontal axis. 24 hour IP in red and blue, 3 month cumulative in black and yellow plotted against well ID . 24 hour IP in barrels on right vertical axis.

          • Dennis, this tells me the first three months’ cumulative is a better, or steadier reflection of overall well quality. I keep wondering if water cut isn’t a parameter which can be used to segregate these wells?

            • Dennis Coyne says:

              Hi Fernando,

              Water cut has tended to increase over time, so if we included water cut it would be like adding time to the mix.

              What about a plot of 3 month cumulative BO vs 3 month cumulative BW?

              • If you do that plot, it probably should be the ratio Cum BW versus Cum BO (cumulative water to oil ratio versus well completion sequence). Based on what I’ve seen previously it will show a very clear tendency to increase as a function of well count.

                However these types of curves can have unexpected inflection points (such as when they realize they ought to complete in a different fashion).

              • Dennis Coyne says:

                Hi Fernando,

                Thanks. Before reading your comment I did 3 mo cumulative oil vs water

                There seems to be about 2 barrels of water for every 3 barrels of oil on average.

                • ok. We know WOR increases with well sequence number. So the trick is to plot the older well cumulative oil versus this potential diagnostic parameter (3 month WOR cumulative). If they have a significant number of wells with say 3 year life then it should be possible to plot cumulative oil versus 3 month WOR. That may give you a diagnostic parameter??

              • Dennis Coyne says:

                Another water and oil chart with the 3 month cumulative water output to 3 month cumulative oil output ratio vs well sequence. Well 1 started producing in Jan 2012 and well 5030 started producing in August 2014, wells are in sequence by date with wells sorted by well name for wells starting production on the same date. The trend is up from about well 3000 (Sept 2013), but there have been noisy periods on several occasions.

                • Dennis Coyne says:

                  Chart above is a 100 well average of the 3 mo. cumul water to 3 mo. cumul. oil ratio.

                  • That shows a pretty clear trend to increased Water to Oil ratio. Let’s see….take well population from 1 to 3000, and sort for the ones with the three month water to oil ratio above 1. That ought to yield a population of wells with the parameter closer to the overall value they will be drilling (around 1.5 WOR). Because well numbers below 3000 are older you can take the average recovery for x years for the sorted population. That in turn may be a predictive parameter for the well population they WOULD have drilled if they had continued using the same practices. I think they are about to get more selective. looking at that 1.5 WOR family may be a good idea. We never know until the data is visualized.

        • Dennis Coyne says:

          Another Chart with wells by date, well 1 started producing in May 2013, and the most recent wells started production in August 2014 (end of data is October, so 3 month cumulative requires an August start). There are about 1750 wells with IP data collected by Ron and monthly output data collected by Enno Peters.

          Thank you both for sharing your data. Note that for each month from May 2013 to August 2014, the order of wells within months was randomized.

  6. Ron, when i look at this type of well population I also look at total fluid, gas to oil ratio and water cut. A well’s ability to produce is handicapped by water. On the other hand gas helps the column move to the surface.

    Once a well goes on artificial lift the gas ratio can be a hassle (the pumps aren’t designed to compress the free gas). But if you are focusing on the first 60-90 days of production I don’t think the artificial lift issue is that meaningful (??).

    If you want to diagnose if well quality is decreasing I would simply use the first 90 days’ cumulative production (check the validity of this parameter comparing the first 90 days’ cumulative versus three year cumulative for older wells).

    The problem I see with trying to be so prescient is that the frac jobs may be using larger volumes, or the regulations are forcing them to cut back on gas flaring. This can get complicated.

    • Dennis Coyne says:

      Hi Fernando,

      I used your original idea of 3 month cumulative vs 3 year cumulative for older wells and only had about 1700 data points up to Nov 2011, so I changed it slightly to 3 month cumulative vs 2 year cumulative so we have 3400 data points which extend the data to Nov 2012. Chart below.

      • Dennis Coyne says:

        Using the linear relationship from the chart above between 3 month cumulative and 2 year cumulative output, I used 3 month cumulative data (200 well average of wells sorted by date of first output) from Dec 2012 to August 2014 to model the 2 year cumulative and extend the 2 year output to wells starting production in August 2014.

        This assumes the relationship from Jan 2010 to Nov 2012 between 3 month cumulative and 2 year cumulative continues to hold for wells drilled from Dec 2012 to Aug 2014, the assumption may well be incorrect. If it is correct the 2 year cumulative going forward would look like the chart below based on available 3 month cumulative data.

      • canabuck says:

        If the average well in the Bakken field produces 100,000 barrels in 3 years ( $50 million), and costs $10 million +- $4 million.
        Then there is some serious money still to be made in that field.

        • Boomer II says:

          100,000 barrels in 3 years ( $50 million)

          How do you get that? Those barrels would have to be selling for $500 each.

          • canabuck says:

            Your are right. $5 million is the correct revenue number.
            It seems like a lousy investment.

            • Dennis Coyne says:

              Hi Canabuck,

              The average well produces 125 kb over 2 years, and 150 kb over three years. Net revenue is about $32/b, so ignoring the discount rate (for future money being worth less than present money), that amounts to 4.8 million in net revenue over three years for a well that costs at least $7 million (optimistic estimate of well cost). I agree this would be a poor investment.

              At these prices a well would need to produce 218 kb to pay out in 2 years, very few Bakken/Three Forks wells produce at this level. The best results by company for the average well over the 2009-2014 period are by QEP Energy at a 220 kb 3 year cumulative which would barely pay out over 3 years.

              I agree at an oil price of $65/b or less, there will be very few new wells being drilled as it is a lousy investment.

      • Excellent trend. The forward looking forecast looks very sound. It tells me the latest well crop was completed in decent rock and with better practices.

        This approach can be used to forecast total performance, but if water cut is used somehow to separate them into populations you will get a refined look.

        There’s a way to prepare hyperbolic and exponential curve fits to extrapolate for say 10 years, which requires linear programming (I prepared one many years ago using Fortran). However my experience is that if you prepare a very detailed analysis it doesn’t perform much better. You are at about the 60 % solution, and going beyond 80 % isn’t practical.

        Based on what I see these producers do need a lower transportation cost, higher prices at the refinery gate, and a lower well cost.

  7. Allan H says:

    I think this very detailed analysis gives great confidence to the idea that newer wells are producing less oil. The only thing further that could be done to confirm this would be to do an actual spatial relationship between well outputs, permit numbers and physical location.
    Thanks a lot Ron for all your work and producing such an interesting and informative site.
    I also really appreciate the level of commenting on this site, some very interesting points and discussions occur below the main posting.
    Have a Merry Christmas.

  8. David Hughes just sent me the below chart with this comment:

    Here’s a chart of average first six-month production for Bakken wells from 1/1/2013. The wells are sorted by first production date and are all wells drilled in 2013 and 2014 with at least six-months of production. The well count on the x axis is all wells from year zero that have at least six months of production.

    I am having a little trouble with his “Year Drilled” axis. But it seems to confirm that production per well peaked in late 2013 and early 2014.

    • Watcher says:

      This is from Sept before the price smash would have asserted in more or less any way. Geology is much more compelling than dollars.

    • Wake says:

      Very interesting post Ron

      One thing I wonder if can be ruled out, if new techniques produce more water and less product initially, it could screw things up

      Does the permit specify exactly what kind of completion will be done?

      In other words are producers locked in to an old technique based on an old permit

      More likely it would seem you are onto something

      • No, I don’t think technique has a lot to do with the percent water cut unless they count a lot of frac water. Bot that still wouldn’t cause them to produce less oil. And no, I am pretty sure the permit does not specify what technique to use. Here is what the Permit says:

        #30285 – XTO ENERGY INC., STENEHJEM 31X-28D, NWNE 28-150N-97W, MCKENZIE CO., 275′ FNL and 2220′ FEL, DEVELOPMENT, SIVERSTON, ‘Tight Hole’, 2225′ Ground, API #33-053-06602

        ‘Tight Hole” just signifies that it will be a confidential well. I don’t think it has anything to do with sex. 😉 The N and W is the location. I have no idea what FNL or FEL stands for but I doubt it has anything to do with drilling technique.

        • From north line and from east line. It’s an old coordinates system. In other nations we use x and y as per the national cartographic agency, making reference to the projections, and also add lats and longs. The directional target windows have to be included. I can’t tell from the statement what they do about the horizontal leg. I assume they don’t allow wise guys to drill across lease boundaries unless they have the other leaseholders’ agreement.

    • Hughes explains the “Year Drilled” problem:

      Oops yes that shouldn’t be year drilled. It is simply the well count in the order of first production starting 1/1/2013 – the ticks are at 500 well intervals. I plan to look into this in some of the other plays as well to dispel the myth that technology can trump geology!! Dave

    • Political Economist says:

      What Hughes called “Years Drilled” appears to be a mis-typo for “Wells Drilled”

      Ron, thank you for your painstaking but very interesting and very important work.

    • Dennis Coyne says:

      Chart below with NDIC data collected by Enno Peters though Oct 2014, wells with 6 months of output started producing in May 2014 (month 6 in Oct 2014). Data from Jan 2012 to Oct 2014, data from 4569 wells, 200 well trailing moving average has trended up over this period for the 6 month cumulative. Well 1 started producing in Jan 2012, the last well started producing in May 2014 for data plotted, wells for each of the 29 months are randomized (order of data points within each month is chosen at random).

      • Dennis Coyne says:

        For comparison the horizontal axis is the well ID#, again this is 6 month cumulative output data for wells starting production from Jan 2012 to May 2014, with a 200 well trailing moving average and a trend line on the output data.

        The dip in the 200 well moving average may not be significant because there are only 60 wells in the data set between 27,000 and 27,700. For comparison there are over 400 wells with well ID’s between 26,000 and 27,000 in this data set. For well IDs between 20,000 and 26,000 there are about 4000 wells or 670 wells per 1000 well ID numbers.

        Basically the data is too sparse above well ID 27,000 for 6 month cumulative data to tell us very much at this time.

        • Dennis Coyne says:

          Due to the uneven distribution of wells by ID#, I did a 200 well average on the 6 month cumulative data sorted by well ID #, then I plot the wells from lowest ID # (well #1) to highest well ID # (well #4568).

          To me it is not clear if the dip towards the end is significant, looks more like statistical noise, the overall trend over the 2012 to 2014 is towards greater output, though this will flatten over time and then decrease. I am not sure we are there yet, I think we will know in 6 to 12 months, Ron has suggested patience, and I agree we will have to wait and see.

        • Dennis Coyne says:

          Forgot the chart

        • Dennis Coyne says:

          The following chart is similar to the previous chart, but wells are sorted by well ID# rather than by date. 200 well trailing moving average vs well #, where wells numbers start at 1 and end at well #5347, well #1 has well ID#=17308 and well # 5347 has well ID#=28859. Again, the trend is up since Jan 2012 (data set includes wells from Jan 2012 at the earliest, though wells are not sorted by date) and the dip below the trendline after well # 5200 is likely to be statistical noise.

  9. Watcher says:

    This is loaded with “shale is TBTF” evidence. e.g.,

    The Perryman Group estimates that the industry as a whole generates an economic stimulus of almost $1.2 trillion in gross product each year, as well as more than 9.3 million permanent jobs across the nation.

    That’s oil in total, not just shale.

    API had this, but probably quoting the same people:

    The API’s report said each of the direct jobs in the oil and natural gas industry translated to 2.8 jobs in other sectors of the U.S. economy. That in turn translates to a total impact on U.S. gross domestic product of $1.2 trillion, the study found.

    Shale is what, about 40% of total US oil production? If that’s linear it’s 480 billion dollars at risk. 0.480/18 trillion = 2.5% GDP drag. Job wise it’s probably a bigger impact because those jobs pay much better than waitressing and medical certificate people, where the only other job gains have been seen.

  10. coffeeguyzz says:

    Mr. Patterson, Two charts – Fig. 2-9 from Mr. Hughes’ Drilling Deeper and slide/page 7 from ND’s September 18th ‘ND Producing Counties’ presentation should – clearly, I would think – firmly put the ‘drilling sweet spots’ meme in context.
    In Mr. Hughes’ slide, the ‘greenish blob’ to the left is the Elm Coulee area with considerably lower productivity than ND’s Bakken/Three Forks formation. The relatively much larger areas in ND that contain red (bright yellow in the ND DMR’s slide) are barely drilled compared to other fields – such as the Sanish – which are heavily laced with high-output wells.
    There are MANY reasons operators drill in less-than-most productive locations in the early years of a ‘new’ find, including, but not limited to the all important Held By Production clauses in the leases which have a limited – frequently 36 months – window of time in which an operator MUST produce hydrocarbons or go bye-bye.
    After the land grab is over, operators may be inclined to drill delineation/appraisal wells – especially with high priced oil to compensate presumably lower output.
    The underlying Three Forks – with at least three productive ‘layers/benches’ – has not even been delineated yet.
    Just a few moments looking/ studying both Mr. Hughes’ slide and the even more informative ND DMR slide with Bakken-wide 60 day IPs, current as a few months ago, should unequivocally demonstrate there is a huge amount of highly productive area yet to be developed.
    While I am in disagreement with many of your conclusions, I appreciate the copious amount of time and effort you put forth and wish you an agreeable respite in the coming weeks.

    • Frugal says:

      Just a few moments looking/ studying both Mr. Hughes’ slide and the even more informative ND DMR slide with Bakken-wide 60 day IPs, current as a few months ago, should unequivocally demonstrate there is a huge amount of highly productive area yet to be developed.

      This begs the question why these “highly productive areas” haven’t been developed yet. If they’re that good, nobody would have ignored them for the three years while oil was at $100/barrel. Your above statement goes directly against human nature and I therefore call it false.

      • coffeeguyzz says:

        Frugal, the areas mentioned have not been ignored, each 2 sq. mile DSU (Drilling Spacing Unit) has at least one well on it – as is clearly visible in the DMR slide. The far more densely packed fields with yellow lines (wells) are the forerunners of what will come to pass in the fields that are now held by the operators with high (over 500bpd 60 day IP) producing wells on them.
        A further factor is the lack of infrastructure to economically remove the hydrocarbons. A somewhat dramatic example of this currently exists in the Marcellus as there are presently about 2,000 wells – a year’s worth of effort – already drilled and fractured but not flowing due to lack of pipelines.

        • Frugal says:

          Exactly, it’s not highly productive but instead less productive and therefore more expensive to extract than what ‘s being produced right now. And this is also why the infrastructure doesn’t exist yet. This is a clear example why peak oil is real.

    • Mike says:

      There is no such thing as “Held By Production” clauses in an oil and gas lease. There is a primary term in which the Lessee has a designated length of time to commence operations to establish profitable production, usually 2, 3, 5 years, or the lease terminates. After production is established the lease can be perpetuated for as long as profitable production exists, without lapses usually not to exceed 3-6 months. That is where the term held by production comes from. Many later oil and gas leases taken in shale plays actually contain continuous drilling provisions whereby operators have to drill it all up, or lose it.

      Early in the development of the Bakken and Eagle Ford plays, sweet spots containing all the endearing traits (perms., high oil saturations, over pressured, high GOR, low waters) necessary to make good wells were delineated and those areas got pounded with wells. Economy of scale, water disposal systems, pad drilling, zipper frac’ing, gas gathering systems, stock performance, steep decline rates, and the need to book as many barrels of reserves as possible for the benefit of the finance folks all required the good stuff got drilled as fast as it could get drilled. Look at drilling permits and you’ll see unit wells as high as #15H or higher being drilled already. I do not accept that there is huge amount of “highly productive area” yet to be developed. Whatever amount of productive area is left is hardly going to be developed at 30 dollar net oil prices anyway. Going forward its debt that is going to dictate how fast what gets drilled.

      I am going to keep you own your toes as much as I can, Mr. Coffee. I for one am tired of the bullshit the shale oil industry keeps delivering to the American public and a great deal of what you post comes straight off company websites and press releases. America needs the shale oil industry to survive but lets call it for what it is; very high cost, low return hydrocarbon extraction that is now suckin’ air because of 55 dollar oil prices.


      • coffeeguyzz says:

        Mike, your first sentence in the second paragraph is so demonstrably false, I am very surprised. When Mark Papa announced in the spring of 2010 that EOG had leased hundreds of thousands of acres in the Eagle Ford, there was not only minimal drilling prior to that, Floyd Wilson’s ‘discovery well’ two years earlier with Petrohawk barely registered in the wider oil industry. EOG’s people were very nervous about investing all that money in yet-to-be-drilled acrege.
        ‘Pounded with wells’? You or anyone can look at the ND DMR slide and see all those ‘white’ dashes to the right that denote the Parshall field, widely acknowledged as the sweetest of sweet spots in all the Bakken. Barely nothing there yet but EOG’s retention wells to protect their lease obligations.
        Oh yeah, Mike, I just made up that HBP stuff to sound like I know what I’m talkin’ about.

        • Mike says:

          There are no HBP “provisions” in a oil and gas lease; google it. Drilling a well under the primary term of a lease is different. One well can sometimes HBP a lease, or pooled unit, but not always. If you are going to be a spokesman for the shale oil industry I just want to make sure you get your terminology right. I made my point, lets not get in a chicken fight about that.

          Yes, early in a source shale play there is vast amounts of acreage leased. Companies delineate their acreage plays and use well analysis and a learning curve to find sweet spots. There is a lot of scenery that gets a well drilled on it in the delineation process, when those wells are not so good that scenery is subsequently never developed. For the reasons I mentioned, and stand by, that Mr. Frugal correctly questioned, those sweet spots get the snot drilled out of them. If all shale was created equal, as you seem to imply, why focus on any sweet spot? Lack of infrastructure? Geeze.

          It is not going to happen the way you want it to happen, Mr. Coffee. It wasn’t anyway and oil prices have foiled the abundance party. Sorry, don’t get mad at me.

          I think if you are drumming attendance to another shale oil revival meeting you might be disappointed in this Peak Oil Barrel crowd. They are pretty savvy.


        • shallow sand says:

          I looked at North Dakota production info for October, 2014. Parshall field has 328 wells with reported production plus 37 more on confidential list. It has had the best wells in the Bakken for the most part. I suppose the issue is how successful down spacing will be.

          • shallow sand says:

            Also interesting to note 161 of the 328 wells wherein production was reported showed oil production in October, 2014 of less than 2000 bbl, or under 70 per day. Does that mean the field varies greatly, depletes quickly, or both?

      • shallow sand says:

        I likewise have no doubt there are some great wells in Bakken, EFS, etc. But there are also many that are not.

        If I’m not mistaken, the oil EUR in Bakken is 320,000 on average and 168,000 in EFS. Not sure about numbers for other areas. Gas sales help somewhat. Most water appears to be trucked, which isn’t cheap.

        Wells cost $7-10 million in these areas based upon my reading. This makes the high IPs less impressive. I think many get caught up in those high IP. Yes a 500+ IP in the lower 48 is great for a $750,000-$1million vertical hole. But what is the difference in profitability between a $750,000 vertical hole in S Texas that has EUR of 16,800 v the “average” EFS horizontal hole?

        I suppose the LOE ratio for the above example is not 10-1. On that I stand to be corrected. I’ve posted this type of comparison more than once and no one seems to be interested, let alone point out that I’m wrong.

        I agree these wells have really made an impact, but IMO on the whole they need a higher oil price than present to make sense.

      • Anonymous says:

        Mike doesn’t need any help from me but I can assure everyone that Mike speaks truth about the Oil and Gas Leases. I am landman in Midland Texas with more than 30 years of experience as a major company employee and as an independent putting deals together.

        Mike is spot on with everything he says on this blog. I would post more on the Permian Basin but I am not current on any of the well costs.

        Every geoscientist that I know and every petroleum, drilling, operations, or facilities engineer with more than 10 years of experience would tell you the exact same thing that Mike has posted on this blog.

        Oh, and Merry Christmas to all!

        • Watcher says:

          All y’all Texans swaggering because of the Cowboys.

        • Mike says:

          Thank you, sir. Merry Christmas to you.


          • Carl Martin says:

            Sorry folks,

            But I’m having an extremely difficult time even believing, that these PO discussions about Bakken sweet spots supposedly being tapped out are still going on….AFTER ALL THESE YEARS!!!!!

            All you had to do was to look at the maps KOG was putting on their website, which show exactly where each Bakken well is drilled. Then you compare that drilling pattern to CLR’s maps, which show you where all the sweet spots are. Even Rune is now “aware” that the sweet spots are largely determined by pressure gradients, which is what CLR’s maps shows. I found out about all this, MORE THAN FOUR YEARS AGO !!! by simply writing an email to CLR and asking why they choked back their wells so much.

            CLR also presently claims to have more than eight years of future drilling sites available in the Bakken (at their present rate of drilling) which they say will yield more than 750,000 boe in EUR’s per well. As CLR is a good proxy for the entire Bakken, what does that tell you about the future of the entire Bakken?

            I might mention that “the best” definition of a Bakken sweet spot given at this website by a true believer, “Watcher”, was that sweet spots were defined by latitude and longitude, not EUR’s. How pathetic.

            If you don’t believe what the industry is saying, then you just admitted that your point of view is based upon BELIEF, not facts. Therefore, PO is a religion. If you want it to be a science, then you have to first disprove what the industry is saying. I have noticed, that no one here is actually doing that.

            As for this sentence from the above “article”…… ” The first measured 24 hour production from Bakken wells is a very good predictor of the future production of that well.” The truth is exactly the opposite, for among many other reasons, the choking history is not even taken into account.

            All the recent mega activity at this site just seems to be one big cover up of the fact, that all your great PO theories got shot to shit with the recent fall in oil price due to over production from US shale. The latest figures from the EIA show that 9,137,000 bpd were being produced in the US as of 12/12/14, and that is an increase. Sorry, but that is not how terminal decline plays out in the world of reality.

            • Watcher says:

              8 yrs. 750K barrels EUR per well. At current 175ish/month well addition rate that’s 16000ish wells added in 8 years.

              Current total 11,000ish. So 27000 wells total then. X 750K =

              about 2 Trillion barrels of oil. Don’t think even CLR expects more than 50 billion, and they are bizarre. But hey, at $40 barrel Bakken sweet prices, that’s a lot of money. $80 Trillion. What a bonanza.

              CLR was $30 a few days ago. $80 a few months ago. Maybe they’ll go bankrupt. That will really mess up Mrs. Hamm’s lawyers.

              • Carl Martin says:


                I’m not going to even bother to check your math. Your numbers are way too far out for me. But, more than four years ago, CLR estimated 24 billion boe recoverable. That was recently upped to 62-96 billion boe “recoverable” (@$100) Call it less, if you like at today’s prices. But, the Bakken is still Ghawar sized, so you can eventually expect Ghawar sized production.

                As to the number of eventual wells, try starting at 100,000, and go up from there. In the 4,000 square mile CLR designated sweet spot, their plan is for 16 wells per square mile (in four different zones) which means 160 acre spacing. That’s 64,000 wells right there.

                How about Y-O-U defining what constitutes a PO Bakken sweet spot in EUR’s, instead. Then, we can start communicating. (maybe).

                • shallow sand says:

                  Carl Martin: Is an average EUR of 750,000 net bbl of oil per well accurate in the Bakken? It doesn’t appear that it is when one looks through the public information put out by the State of North Dakota. Further, it doesn’t appear generally that Continental has the wells capable of hitting this figure. EOG and Whiting are the primary companies to have the wells capable of 750,000 net bbl EUR, based upon public data.

                  I have read on this site that 320,ooo gross bbl EUR is more probable overall in the Bakken, although I am sure if people have agendas they can skew the numbers. I think at least a few of the people who post here appear to have strong enough math/science/engineering backgrounds to make some pretty reasonable calculations and are making an unbiased attempt to be as accurate as possible.

                  Trying to figure out what is accurate and what is not is more difficult than what you let on, IMO. It does appear that substantially lower oil prices may provide some answers.

                  • shallow sand says:

                    Oops. The 750,000 number is BOE, so that does make a difference. The 320,000 figure I referenced is BO, not BOE.

                  • shallow sand says:

                    BTW, CLR just cut CAPEX budget to $2.7 billion. This is the second cut they have announced in about 3 months.

                  • Watcher says:

                    There is that. 2.7 Billion at $10 million/well, from the CLR Nov investor briefing, is 270 wells. For the whole year.

                    Avg flow year 1 is about 450 bpd? So incremental revs in 2015 would be 270 X 450 X $30 (net of Bakken Sweet minus royalties, taxes) = $3.65 million, for the whole field for the whole year from new wells.

                    Maybe Warren Buffett will do what he did for BoA. They created a special preferred issue for him to buy $5 B of. Paid 8% dividend or something. Hell, he may get more of Harold’s money than the ex.

                  • Thirunagar says:

                    “Avg flow year 1 is about 450 bpd? So incremental revs in 2015 would be 270 X 450 X $30 (net of Bakken Sweet minus royalties, taxes) = $3.65 million, for the whole field for the whole year from new wells.”

                    err I think you forgot that a year has 365 days? That comes out to more than 1.3 billion dollars even at these depressed prices!

                  • Dennis Coyne says:

                    The average well flow for the first year is about 233 b/d, not 450 b/d (second month output is usually highest at about 400 b/d), the average well produces roughly 85 kb in year 1.

                    Using Watcher’s figure of 270 wells and call refinery gate oil prices $60/b, transport costs $12/b, OPEX plus other costs $8/b leaving $40/b, then we need to pay taxes and royalties of roughly 25% on wellhead revenue of $48/b, so we need to subtract another $12/b and we get to $36/b net. If 270 average wells are drilled we get about 23 million barrels of oil in year 1 for a net of $826 million. The wells cost about $9 million each for a total of $2.4 billion. Looking at a single well, we need 250 kb for simple payback (ignoring the time value of money), but the average Bakken well takes at least 8 years to reach 250 kb of output, typically a “good well” pays out in 18 months or less. At two years the average Bakken/Three Forks well in North Dakota produces about 130 kb which is about $4.3 million in net revenue and far short of a $9 million payout level.

                  • Carl Martin says:


                    No, the 750,000 boe is just a reference to CLR’s claim, that they have eight years of drilling activities, that can produce that much per well. TRANSLATION: The current low oil price environment is easily weathered by simply high grading. Any company with similar property can do the same. But, many of the newer, smaller Bakken dotcoms have no such property, so their very existence is in great danger.

                    It is nowhere near the average Bakken EUR.

                    By the way, unlike so many others here, I don’t guess anything, and have very few opinions of my own. I mostly just repeat what is generally accepted knowledge about the shale industry, because no one has so far been able to prove any of it to be wrong.

                    It’s just that none of my researched information supports any PO theory at all. That’s the rub.

                  • So at what cost does oil have to be produced in the future? Where are we find this oil? And are you so negative about renewables you think they won’t be competitive with oil at $500 per barrel in today’s dollars?

                • “I have read on this site that 320,ooo gross bbl EUR”

                  I have been using just under 300,000 for the diffusional model I put together a few years ago.

                  What is nice about making early projections is that you can see how production plays out.

            • So where do we get the oil when the better shale zones are drilled and declining? Chinese shales?

            • Dennis Coyne says:

              Hi Carl,

              Enno Peters collects data on all North Dakota wells from the NDIC, the EUR of the average Bakken well between 2011 and 2014 is about 325 kb of oil, if you add in natural gas and convert to barrels of oil equivalent(boe), it increases to 406 kboe, but note that the extra 80 kboe is very low value relative to crude.

              Note that the typical well in an investor presentation is not the same as an average well. Maybe CLR only drills above average wells. 🙂

              • Carl Martin says:


                I don’t dispute your average EUR numbers, as I don’t have the neccesary info to do so. Besides that, they sound about right to me. But you need to be careful about getting too hung up in the word or concept of average. After all, what do you think is the average gender in the US in Dec. 2014?

                Investor presentations ALWAYS show their best results, and almost never reveal all the failures, that bring their averages down. This is just business as usual. But, it is okay because they are always moving up the learning curve, so by showing their best results now, they are giving a clear indication of where they expect their average results to one day be.

                Also, if you want to understand this industry, it does no good to focus on average companies, you need to look at the leaders, because they are the trend setters. Ultimately everything is based upon best practices, and EOG is presently the undisputed best at everything. They just don’t keep investors very well informed. Therefore, I still get most of my info from CLR.

                This sentence of yours is not as silly as you might think. “Maybe CLR only drills above average wells.” In a sense, “they do.” That is to say, that they have no monster wells, that I know of, they choke a lot more than others, and they have used their standard 10,000 foot lateral and 30 frack stages well design over most of the Bakken, even when it didn’t make economic sense to use it. It is because they use their standard well as a measuring stick. Now they have a fixed point for reference to compare different areas of the Bakken.

                That’s why they know exactly what they are talking about, and why I accept most everything they say. You obviously don’t. But, you have never given a good reason for not doing so, other than the results they are claiming don’t show up in the data bases you are using. Why don’t you just send them an email and try to clear up a major misunderstanding on your part? Then everyone at this website will be able to move forward.

                • Dennis Coyne says:

                  Hi Carl,

                  Continental wells with first month of output between Jan 2009 and Oct 2014 have an average cumulative output over 70 months of 186 kb, this is slightly below the average Bakken well over the same period for all wells completed(925 wells).

                  There is a lot of hype in investor presentations.

                  The Continental wells will produce considerably less oil that the 480 kb claimed (only 80% of the 600 boe EUR is oil) in investor presentations. The EUR is more in the 250- 300 kb range for the average Continental well.

                • I wonder if they have run flow meters to check how much flow they get from the toe of a 10 thousand foot lateral. You seem to follow this closely, are those wells slugging?

                  • Dennis Coyne says:

                    Hi Fernando,

                    It is not clear who you are asking.
                    I do not know what slugging is.

                  • Dennis, sometimes very long wells in three phase flow can have phase segregation in the horizontal section. This causes liquid slugs to accumulate, which tend to move up the well in slug flow. This can be avoided by placing the heel higher than the toe. But I’ve never worked with a 10 thousand foot well. And I was wondering if they had sensors to confirm the toe is producing.

                • FreddyW says:

                  I came to the same conclusion as you Dennis. The Continental wells are actually bellow average. I have attached a graph showing the production profile for Continental wells from January 2010 to October 2014. I also included the average Bakken well profile for 2010 for reference. The first 3 year cumulative oil + gas production for an average Continental well is about 170.000 boe. No one knows what the EUR will be, but EIA suggests that 50% of the oil has been produced during that time ( which gives an EUR of about 340.000 boe.

                  Carl, you are saying yourself that they only show the best results and don´t tell about their failures. So why should we then believe in anything they tell us? I have learned that you should never ever trust in what companies tell in their presentations. Especially not smaller companies which are dependent on cheap credits. It is actually quite disturbing that companies can make such exaggerations and get away with it.

                  I however agree with you Carl that there are still drillable locations left in sweetspots. But perhaps some companies start to run out of them. That would affect total Bakken output, which I am mostly interested in.

                • Dennis Coyne says:

                  Hi FreddyW,

                  Along the same lines I did the chart below. Cumulative well profiles.

                  • FreddyW says:

                    Thanks Dennis. It´s good that we are several people who can look at the data from different angles.

          • Dennis Coyne says:

            I posted a chart for average Bakken cumulative output per well by company for four large companies over the Jan 2009 to Oct 2014 period( about 1/3 of all ND bakken/Three Forks wells drilled(3462 wells).
            The “avg” well is for all Bakken/Three Forks wells in North Dakota over the same period with a cumulative of 197 kb per well over the first 58 months of output.

            Chart came out a little small the first time so I will try it again.

            • Dennis Coyne says:

              I put together data for more companies, about 75% of total wells, too many for a clear well profile so I am using a bar chart with 54 month (4.5 year) cumulative output for the average well for each company over the Jan 2009 to Oct 2014 period. The average Bakken well is shown for comparison. Companies with more than 200 wells over the chosen period are presented below.

              • shallow sand says:

                Dennis, thanks so much for this information!

                Surprised by QEP, they don’t get the hype the others do. Always assumed EOG had the most productive wells in the Balkan due to Parshall. Must have wells in other areas which bring the average way down.

                I wish TX reported by well as opposed to by lease. Would be really interesting to see the same info for EFS and Permian horizontal wells.

                Really seems irresponsible for these companies to claim EUR oil at 600,000+. I guess they assume the wells will produce 40-60 bbl per day for 25 years. Will be interesting to see if they do.

                • shallow sand says:

                  Bakken. Spell check got me I guess?

                  • toolpush says:


                    It looks like the quote from the other day, “Continental must drill all above average wells”, may need some adjustment. To “Continental must drill all below average wells”?

            • Dennis Coyne says:

              Hi all,

              I show the North Dakota Bakken/Three Forks cumulative average well profiles by company for the Jan 2009 to Oct 2014 period, total wells for this set of companies is 6472 wells of about 8054 wells completed (drilled and fracked) for all companies operating in the North Dakota Bakken/Three Forks (80%). This is where I got the data for the bar chart. QEP energy is the high well profile and OXY is the low well profile, the middle dashed line is the average well profile for all companies (including those not presented in the chart).

  11. Ronald Walter says:

    zoom in, you’ll see well numbers, locations, horizontals.

    Updated on 12/16/2014.

  12. Watcher says:

    Initial Monday numbers, Sydney open, Japan pre open 8 AM, oil down 52 pennies to low $57s. Dollar a bit strong across the board.

  13. coffeeguyzz says:

    Exactly, Mr. Walter. If one uses the ND DMR Gis map to get a micro view, then glance at ‘bigger picture’ using either Mr. Hughes’ colored dots or – more informatively – the aforementioned ND slides, it should be clear that the high productive/sweet spots (red – Hughes, yellow/white – DMR) have a lot of drilling yet to go.

    • Watcher says:

      dood, you have not one square inch left to go at $55.

      And I think you know it.

      • Mike says:

        Watcher, I’d say the dance floor is getting a little crowded, wouldn’t you?

        • coffeeguyzz says:

          That’s a great graphic that shows many things. The spacing on virtually every one of those wells is st least 1,200′ apart. The successful down spacing will prompt a near doubling of those wells if the 700′ spacing proves widely workable. The designs of the fracs are more and more purposefully geared to extend no farther than 300′ or so from the wellbore.
          The underlying Three Forks formation has at least two or three productive layers that the USGS actually claims to be larger in recoverable hydrocarbons than even the middle Bakken.
          Crowded dance floor? If Shania walked in, room would be made garonteeed.

          • Watcher says:

            I have a geologic theory to propose on the basis of no evidence. Doug, listen up. Mike, ditto.

            So we drilled and fracked a lot of laterals. Then we are going to shut down. For a year or three. We’re going to near zero output. Loss of 3.5 mbpd, up the imports to keep people fed, etc.

            People come back and say, the price is up. Let’s get going again.

            But down there 10,000 feet we have four counties that have been pin cushioned and nanopores down there having been subjected to 3-5 yrs of explosion type vibrations. And there are lots and lots of empty pores now, from wells drilled and emptied.

            If we give the nanopores in the undrilled places long enough, with very poor natural permeability, and lets say long enough isn’t a million years, lets say it’s just 3, might that oil flow over to the empty pores?

            Then you have drilled and fracked wells that refilled, but only about 1/8th of what they had. The pressure is gone. Much more important, those areas not yet drilled are losing their oil. It’s flowing to the already drained wells.

            I *think* this makes the whole field uneconomic pretty much forever? No one well will have enough in it to warrant going after it?

            • Doug Leighton says:

              Heh Watcher, I’m currently “in transit” and, damn it, I left my crystal ball on the mantle. Truth is I have no idea. My gut feeling is you could come back and carry on. Perhaps the areas drilled like Swiss cheese would be degraded on some scenario like you suggest, BUT, in general, tight formations are tight and fracked “cylinders” could (should) be independent (new) structures — I imagine. But your opinion is as good as mine. And although I’ve some geological savvy I’ve zero LTO experience. I’ll think about your question on our next flight leg but main concern right now is Christmas presents getting to Norway (Bergen) in one piece. Meanwhile keep doing your stuff. Cheers.

            • Mike says:

              Watcher, one quick comment before I go to work, its never good to frac a well then shut it in. I know that is true in fractured carbonates and other tight sandstones, it must be true for shale also. As you elude to, the frac “energy” is lost over time (like blowing up a balloon and the letting it squeal out the outlet). Natural micro fractures in shale are expanded and filled with proppant during the frac process; they will closed back if the well is not produced. At that depth there is over burden forces that cause proppant to embed into the shale also closing the fractures.


          • Mike says:

            Well, I don’t know what the scale is on that map and neither to you. Lets assume you are right, they’ll go back in between those wells and drill more wells, when the price of oil is 119.oo dollars a barrel. But to accommodate that, spend more money and get even more in debt, they’ll re-tweak the frac-radiuses on those wells so they DON’T interfere with each other; less sand, less rates, fewer stages?

            But wait, I thought they were doing just the opposite, they were using more sand, more water, bigger rates, more stages, super-hero, big-boy frac’s…no? Might they be doing that to increase frac radiuses and URR on a given unit…to keep from having to drill in between wells? I am confused.

            Whooptie to doo on the stacked horizon thing. Not so good, I hear. And the USGS, well, the boat done left the dock without them out there in California, uh?

            Time to give up the ghost. Time for the shale oil biz to tell it like it is. They’ll win friends and influence more people by telling the damn truth!

            • coffeeguyzz says:

              Mike, both you, I and anyone can get precise scaling from your graphic by clicking on the above (Mr. Walters) link which takes you to the North Dakota DMR Gis map. It contains a ton of info – including physical locations – of every well drilled in the state going back to the fifties. The one sq. mile rectangles are formed into 1,280 sq. acre/2 sq. mile Drilling Spacing Units.
              The issue of mimimally effective spacing between wells is an ongoing quest with companies like Carrizo claiming success with 300 foot spacing in the Niobrara.
              Gotta go. Best wishes and best of luck to you all.

              • Carl Martin says:


                Just curious as to why you (apparently) think that oil companies don’t actually want well communication ( well interference/ pirating) between wells in the same zone?

                The actual production of oil wells is highly influenced by all the natural low grade seismic activity going on in their area. Fracking is just artificial low grade seismic activity, and there is considerable evidence out there, that fracking actually improves overall oil production, if there is well communication going on within specific zones. That’s why nearby wells are temporarily shut in during fracking operations. But, so far no one wants well communication going on between two different zones, because it would be too difficult to monitor and control.

                If done correctly very close down spacing can result in greater overall productivity, and at a lower cost. That is, after all, why it is done. Would you consider doing some homework on this issue?

                • Mike says:

                  The actual production of oil wells is highly influenced by all the natural low grade seismic activity going on in their area.


                  I am sitting on a rig right now trying to get home to see my family for Christmas, Mr. Martin. I don’t have the time, nor the inclination to engage with you, or whomever, about lofty shale oil EUR’s and years of drillable locations, nor do I seek to debate you the merits of zipper frac’ing, interlacing frac tips and the economics of infield development. Whatever you have to say about it comes straight off a shale oil website, or quarterly report, anyway. I have heard it all before. There must be a press package to download somewhere.

                  The point that you wish to make, I think, is that I have it all wrong, as do a lot of people that post here often, about shale oil. It is everything shale oil companies say it is, that you say it is, and much more. Got it!

                  Have a productive day, Mr. Martin. Feliz Navidad.

                  • Carl Martin says:


                    It is geology 101 and has nothing to do with shale oil companies. All the rocks on planet earth are in constant (slow) motion. The proof of this can be seen in oil production. In any given area, or well, it is not at all steady. You can easily see how oil production jumps in all the wells in a given area, when a minor seismic event occurs nearby. Why don’t you ask a geologist in the company you work for about this phenomenom?

                    I’ve been here and done this before with another oil field worker. Just because you happen to work in an oil field doesn’t mean that you know much about the business. What you know, or don’t know, certainly gets revealed pretty quickly in a forum like this.

                    You are basically saying that you won’t prove me wrong, because you don’t have time to do so. That’s just a cover up. You won’t attempt to prove me wrong, because you simply can’t, but your hurt pride won’t allow you to admit it.

                    We are all witness to what coffeeguyzz has said to you, and you wern’t left with a leg to stand on. Sorry, but I’ve yet to meet a PO believer who has not revealed himself to be anything other than a hot bag of air.

                    If that shoe doesn’t fit you, then I’d sure be interested in anything further you have to say.

                  • I’m convinced peak oil is a given. The debate is really about the timing, isn’t it?

                • Doug Leighton says:

                  Carl: “The actual production of oil wells is highly influenced by all the natural low grade seismic activity going on in their area.” What’s your point? Are you suggesting micro seismic events increase or decrease well productivity? I’ve never heard anyone suggest micro seismic activity correlated with oil flow rate increases. I’ve no doubt strong events affect rock permeability, in various ways, but would be loath to say it was working in one direction. Of course there is always background activity (as well as diurnal (tidal) rock formation flexing). If you wish to pursue this I recommend: Stress Waves in Solids by Kolsky, a readable work on wave propagation in non-elastic solids.

                  • Doug, I can’t get too detailed about it here…in some cases we have both lab, and field, data showing vibrations and pressure pulses increase recovery. I have a theoretical outline for pressure pulse effects in heavy oil displacement I may publish one of these days. I haven’t seen data for fractured tight zones, therefore I can’t say anything about it, but I wouldn’t toss ideas in the waste basket so fast.

                  • Mike says:

                    Mr. Leanme, the comment above implied “natural” seismic activity in the earth “highly” effects the consistency of oil production (everywhere). Oil pressure “jumps” in areas of seismic activity, that sediments are constantly moving. I don’t buy that, not to the effect they change production. I have not seen that in 50 years of doing this stuff. We were not talking about induced seismic pulsation or vibration down casing, that sort of thing. I have experienced that theory; in clastic sands and fractured carbonates it did not work.

                    Mr. Martin, by the way, you have the manners of a goat. My trying to get home from a well to see my family for Christmas was not a “cover up.” I wished you a Merry Christmas and you then insulted me. I am not retired (at 65), nor am I an “oilfield worker.” I am still actively engaged in exploration and production, from developing the prospect to seeing the end result into the tanks and managing the production over the ensuing years. That is how I feed my family and the families of my employees. In other words, I have to invest my money into my beliefs, my money where my mouth is, so to speak. How ’bout you? That does not make me an expert on anything, on the other hand I don’t like to be insulted by kids on computers who develop ideas based on website dribble. I think clearly your ideas about 750K EUR’s is BS. You just got embarrassed with some real data.

                    Indeed there are lots of straws to still get stuck in sweet spots, big deal. I believe, and several very smart people believe, that sweet spots are being depleted. Production data, declining IP’s, increasing GOR and increasing WOR all indicate that, clearly. The bottom line in all discussions of oil development, past, present and future, is based on the ECONOMIC sustainability of that development. The numbers and fluff don’t mean nada; its about the money. I am still waiting on the shale industry to sho’ me some money.

                    Merry Christmas, y’all.


        • Why would they drill wells perpendicular to each other? Have you guys discussed the well productivity versus the way the horizontal leg is pointed?

          • Mike says:

            In the Eagle Ford, lateral orientation is generally dip oriented, heel to toe from NW to SE or vice versa. I think this corresponds to stress fractures in the rock. The shale guys down here like to drill two laterals parallel to each other, not perpendicular, and frac both laterals at the same time, something they call zipper frac’ing. The frac’s are designed so that the tips interlace with each other to achieve better URR; that is their “downsizing” MO. Having said that, the shale oil folks are now touting bigger frac’s; more stages, tons of sand pumped at enormous rates, to achieve greater frac radiuses to get those highly sought after IP’s, that translate into big EUR’s, that translate into booked reserves that translate into happy bankers. I don’t why they would then want to drill 9 million dollar in between wells, just to say they can, inside the partially drained radius of a nearby well but hey, if its on the internet, it must be true.

            • Mike, that sure makes sense for the Eagle Ford. I was referring to the Bakken well layouts. Some operators hace wells drilled perpendicular to the “normal” direction.

              Reference the vibes and pulsing, I think it depends on the reservoir. Pulsing works with highly viscous oils if the reservoir is being flooded. It works much better if the producers aren’t cutting a lot of water. I saw some odd results for vibration but that may have been fake data put out by a promoter. But none of this is from natural seismicity.

              • Doug Leighton says:

                Fernando, “but I wouldn’t toss ideas in the waste basket so fast”. I’m not sure how saying: “I’ve never heard anyone suggest micro seismic activity correlated with oil flow rate increases..” is tossing anything in a basket. I understood Carl’s comments as being directed at NATURAL micro seismic activity. Pulsing (something that you introduced) doesn’t seem relevant to Carl’s (or my) remarks.

        • Dennis Coyne says:

          Hi all,

          A few people have mentioned higher density drilling in the Bakken and the layers of the Three Forks which might be exploited.

          The Continental Hawkinson well data is available which is a poster child for higher well density (more wells per square mile).

          Note that the first Hawkinson well was drilled in the three Forks and started producing in Feb 2010 and was very productive (356 kb over first 24 months), two more wells started producing in Sept 2011 (one in middle Bakken and one in Three Forks). All three of these wells look like they were refracked by Sept 2013 when 11 more wells started producing as part of the high density experiment. Early wells were averaged together by month from first output, the early wells are the first 3 wells which started producing Sept 2011 or earlier.
          Later wells are the 11 wells which started producing in Sept 2013 (7 are Three Forks wells, 3 are middle Bakken, and one is not labelled). The later wells produce an average cumulative output about 40% lower than the first 3 “early” wells.

        • Dennis Coyne says:

          Chart with individual Hawkinson wells, the indication is that higher density drilling will reduce the average well output, despite what the investor presentations might suggest.

          Another point, is that sometimes people claim that with low prices the oil companies will just drill in the “sweet spots”. As the Hawkinson wells show, even in a sweet spot, as the first three wells clearly were, further drilling does not always produce high EUR wells, you don’t really know what you will get until you drill and frack and then start producing.

  14. Seems to me the key to this business is to batch drill and complete multiwell pads, use liners, gas lift, design surface systems for 700 Barrels of fluid per day, keep things simple, automate, keep things simp,e, widen spacing and negotiate hard to lower costs. They also need pipelines. And this wouldn’t be such a critical decision if the state used its brains and paced development to hold state production flat at say 700 thousand BOPd. It’s a shame they allowed the play to go wild, it causes a lot of human suffering.

  15. Caelan MacIntyre says:

    “…can you give any examples anywhere or anytime of what you’re talking about??” ~ Nick G


    And/or some of your comments, what they seem to suggest, and how they sometimes read– like a corporate commercial shill… Maybe that G is actually a 6? …Looks a little funny over here on my screen… Maybe there’re attempts being made to assimilate/upsell me as well… Should I upgrade to the new Nissan Leaf-blower or the Toyota Priapus?

    “Permaculture and relocating to the land may solve most of fossil fuel lack of supply.” ~ Rita

    Those are unrealistic. Electric transportation, biofuels and synthetic fuels would work just fine…
    A Nissan Leaf is the cheapest vehicle on the road to own and operate (with the tax credit!), and it’ll get you to any job within 40 miles (and 80 miles, if you can charge at work). A Chevy Volt is among the cheapest vehicles, and it’ll take you anywhere…” ~ Nick 6

    With the tax credit!‘.

    …Examples ostensibly suggestive of those caught in the Matrix/Plato’s Cave, and upholding it while subverting their own foundations, lives, freedoms, fellow creatures. The ultimate prisoners perhaps, ones that don’t believe they are, and that resist reasonable attempts at being freed.

    “In The Decline of the West, Spengler noted that the last phases of every civilization are marked by increasing technological complexity. This is strikingly true of planetary culture today…

    …’Why Civilizations Fail’ outlines quite ably the reasons why civilizational failure is inevitable, why the grasping control ethos of domestication comes to its self-defeating end. The book’s first sentence also serves very well to announce the fatal illusion that prevails today: ‘Modern civilization believes it commands the historical process with technological power.’

    The fallacy of this belief is becoming clearer to more people. After all, as Jared Diamond puts it, ‘All of our current problems are unintended consequences of our existing technology.’ In fact, civilization is failing on every level, in every sphere, and its failure equates so largely with the failure of technology. More and more, this is what people understand as collapse…

    Despite this reach and height, the rule of civilization is based on less and less [consider Ilambiquated’s previous mention of what I call, ‘The Shopper-Shafter’, for apparent programmatic-mining of reciepts for patterns to optimize prices as high as possible to help shift the baselines in the race to the bottom. Have I got that right, Il? May I suggest you somehow incorporate Kardashian as spokesperson and have her riding the new bigger/better/badder Toyota Priapus in a Race to the Bottom Sweepstakes!]. Inner nature is as ravaged as outer nature. The collapse of human connectedness has opened the door to unimaginable phenomena among lonely human populations. The extinction of species, melting polar ice, vanishing ecosystems, etc., proceed without slowing.

    Fukushima, acidifying oceans, Monsanto, fracking, disappearing bees, ad infinitum. Even rather more prosaic aspects of civilization are in decline.” ~ John Zerzan

    • Boomer II says:

      In fact, civilization is failing on every level, in every sphere, and its failure equates so largely with the failure of technology. More and more, this is what people understand as collapse…

      You and the peak oil doomers keep saying the same thing, and I’m not sure what value it contributes. They, like you, expect total collapse.

      No solutions whatsoever. If that is the case, I might as well not bother wasting whatever time I have left to read what you guys write. If I can’t do a thing about it, why should I care what you have to say?

      • Caelan MacIntyre says:

        “They, like you, expect total collapse…” ~ Boomer II

        Read again.

        I have also already mentioned permaculture. But that depends on many things.

        “I might as well not bother wasting whatever time I have left to read what you guys write…”

        ~ Boomer II

        For a second, I thought you already started not doing so. But I don’t necessarily write for you, babycakes. Nevertheless, if you like to blow the praises of Nissan Leaf-blowers or ‘Shopper-Shafters’, I wouldn’t blame your response.

        “You and the peak oil doomers keep saying the same thing…” ~ Boomer II

        The same thing is BAU/BAU-lite or somesuch eat-cake-and-have-it-too/technofixes-for-technoproblems/doing-same-thing-over-and-over thinking and manifestations… Geoengineering, wage-slave jobs for tax-theft for Nissan Leaf-blower tax credits, etc. That’s baked-in doom. You don’t need your so-called ‘peak oilers’ for that. Peak oil is, in a sense, almost small potatoes.

        • Boomer II says:

          The peak oil doomers are just an example of another group of people who think we are all doomed.

          I’m not sure why either of you posts. If the world collapses, what is your point? You’re snarky enough that I suspect you’re doing it mostly as a troll.

          At any rate, if you guys believe there is nothing to do, you are all kind of irrelevant because we can ignore you and still face the same outcome.

          Perhaps we should just let you post and ignore you.

          • Caelan MacIntyre says:

            I could argue that you’re trolling me. Too easy.
            The fact that we are even currently concerning ourselves with peak oil/FF depletion and effects is precisely what I am and have been writing about– doing things ass-backwards in a nutshell.
            So it is highly relevant, even if you want to pretend it isn’t and want to– what is this, kindergarten?– appeal to consensus (‘we should’ threat rather than ‘I should’) suck your thumb in front of ‘us‘ about it and call me names like, “You baaad troll… I– no, we— not want talk to you no more! (bad troll… so bad… *sniff*…)

            • Boomer II says:

              But you haven’t suggested any practical solutions.

              • Boomer II says:

                “This is the time for our species to ‘turn 21′: to transition from adolescence to responsible adulthood as citizens of the planet, before we destroy our own future.” ~ Culture Change

                This is meaningless.

                So what are you planning? A military revolution? A peaceful economic transition?

                You’re posting rhetoric. No actionable plans.

              • Caelan MacIntyre says:

                Growing up, smartening up, and permaculture for starters.
                And suggesting some for us, yourself. Have you? If so, I’d be happy to take a look.
                I might crap on this Dystem, but I do endeavor to walk the talk.

                • Boomer II says:

                  Great. Do permaculture. Get other people to do permaculture.

                  How do you plan to introduce it beyond where it is already being done? How do you plan to phase out both fossil fuels and renewable energy projects and what timetable are you shooting for?

                • Nick G says:

                  I’m glad to see you clarify that you support a specific improved technical approach.

                  Make no mistake – this is simply a more sophisticated approach to agriculture. It’s part of what you might call “general progress”, and is in no way in conflict with electric transportation or other improved technical approaches to “getting stuff done”.

                  In other words, there’s no conflict between permaculture and “technofixes”. Permaculture *is* a technofix.

                  Just, we hope, a better one.

                  • Caelan MacIntyre says:

                    “Permaculture and relocating to the land may solve most of fossil fuel lack of supply.” ~ Rita

                    “Those are unrealistic. Electric transportation, biofuels and synthetic fuels would work just fine.” ~ Nick G

                    “I’m glad to see you clarify that you support a specific improved technical approach.” ~ Nick G

                    You seem to think now that permaculture is more ‘realistic’, despite perhaps being overly simplistic and/or appearing less informed about what permaculture is.

                    But it’s a start, and in any case, I did write ‘for starters’. My personal verdict is not yet out, and probably never will be, with regard to permaculture, nor with the human species.

                    Time will tell, outside of my own ephemeral lifespan.

                  • Nick G says:

                    You seem to think now that permaculture is more ‘realistic’, despite perhaps being overly simplistic and/or appearing less informed about what permaculture is

                    Well, a couple of thoughts, FWIW.

                    1st, insults don’t convince anyone, they just reduce your credibility.

                    2nd, I’m not trying to present an evaluaation of permaculture: I’m just pointing out that there’s nothing mystical about it – it’s an improved “technique” of agriculture (yes, it’s primarily oriented towards ag). I think improved emotional health/spirituality/egalitarian living is a very good idea, but permaculture wasn’t developed by mystics, it was developed by practical people trying to make everyday life work better.

                    Now, it certainly has developed into a system that’s intended to promote a holistic approach to life, and respect for all living things.

                    Which brings us to a basic question: is it possible to approach things through an empirical, rational basis and come to something that is emotionally healthy, even profound?

                    Sure. You might want to take a look at Sam Harris’ latest book: “Waking up – A guide to spiruality without religion”.

                  • Caelan MacIntyre says:

                    “1st, insults don’t convince anyone, they just reduce your credibility.” ~ Nick G

                    Agreed… Is this ‘Grealy‘, you?

                    “What was even nuttier than peak oil was peak gas. The Oil Drum looked truly deluded with the posts by Art Berman who was telling us in 08 through even last year how shale gas was declining so much that it would go bust at less than $8.”

                    “Probably best not to reply to him Ghung.
                    Gail ignores him. He attacks her at every opportunity as she refutes everything he denies.
                    For the last six years he’s been saying things are getting better and we need to ‘just buy a Prius’.” ~ Bandits

                    Seeing as my time is more limited than yours seems to be (paid? how? I’m envious.), I’ll leave it at that with the it-goes-both-ways-caveat, since we’re on about insults…

                    “Never argue with a fool, onlookers may not be able to tell the difference.” ~ Mark Twain

                    Hey, no one’s perfect, I forgive you! ‘u^

                    Let’s try to be better in 2015.

                    ~ Cae

                  • Nick G says:

                    No, the comment about Berman wasn’t me.

                    And, no, quoting misleading insults from “Bandits” or Twain quotes isn’t any better.

                    And, no, an ad hominem suggestion that I’m paid isn’t any better.

                    And, no, passive aggressive “kisses” and forgiveness are also hostile.

                    You might want to find a better place and mode to vent your hostility.

                • Caelan MacIntyre says:

                  So no lightening-up or kisses? Awww… But it’s almost 2015! But hostility? Moi?! Mais, cherie! Perhaps Freud would think you were projecting? Juste un peut? Hm? ‘u’
                  …As long I guess as you understand that not everyone has to have a grey, dull, humorless, imprisoning approach to life. I mean, we can leave that to maybe you and the office drones on the way, in their fossil-fuel-constructed-large-scale-centralized-governpimp-controlled-on-rolling-blackout-grid-powered shit-box Toyota Priapuses (or is that Priapi?), to their tax-theft-for-the-governpimps wage-slave jobs? That’s what you want, isn’t it? Technocracy? Plutarchic Technocracy?
                  Well, if so, there’s a one-way-trip to Mars that might still be taking signups.

                  Oh yes, I got you another quote-prezzie, since you seemed less than enthused by Twain. Try this on, see if it fits:
                  “If you can’t dazzle them with brilliance, baffle them with bullshit.” ~ ?

                  ~ Your contrived-credibility-free Cae

                  (…Puts down the vodka-and-green-tea-egg-nog for a moment…)
                  PS, Crony-capitalist-cum-governpimp-managed anything will not give us what you seem to want, unless what you want is to live in a kind of freedom-restricted prison and to continue to wreck our communities and planet. That’s the ultimate insult, and yes, my hostility there is in abundance, along with resentment and contempt.
                  But as you now seem to be conceding, it’s a social problem, but ‘social problem’ is a loaded term that needs to be evaluated.
                  PS2: All the energy developments and technical details in the world, and their discussions, aren’t worth shit (although shit’s looking pretty good these days) if they disclude real, direct-democratic community control.
                  PS3: Horses didn’t build coal mines, humans did! (They do build usable manure though, unlike one-trick-pony Nissan Leaf-blowers, and you can get around on them, even when the governpimps and their pimped-out infrastructures fade into the anals of history.) ‘u^

                  A la prochaine…

          • Caelan MacIntyre says:

            “At any rate, if you guys believe there is nothing to do…” ~ Boomer II

            I had already posted ‘permaculture’ as well as clarified for you (twice) my sence of how collapse may go (‘fractal’) both links of which I went through the trouble of locating for you as well.

            But we can only do so much for those who insist on being neglectful and/or willfully ignorant or whatever…

            “This is the time for our species to ‘turn 21’: to transition from adolescence to responsible adulthood as citizens of the planet, before we destroy our own future.” ~ Culture Change

            I have already mentioned on TOD that we live in an infantilistic culture where we don’t know how in general to do much of the basics for ourselves anymore, such as with regard to growing our own food, making our own clothes, or building our own homes. There’s another clue for you, sweetcheeks, but I can’t hold your hand for you all the time, especially if you don’t want to follow and/or have your own foregone conclusions about those ‘bad snarky peak oil doomers’ anyway.

            …Hey, doomer rhymes with Boomer! ^u^

            ~ Cae

            • E Auden says:

              Do you believe there are too many of us to go without the inputs of fossil fuels and the technology which boosts agricultural production? We are also draining aquifers awfully fast to feed everyone. Most of our farmland may have already been degraded beyond the ability for permaculture to substitute for existing practices.

              • Caelan MacIntyre says:

                Permaculture is something and among what we will probably have to try anyway, like a life-preserver thrown to us.
                Its practitioners seem to think that good, healthy soil can be regenerated from despoiled with some proper care, insight, understanding, knowledge and wisdom.
                Like, Nick G’s mention of ‘indoor plumbing’ might have to be kind of modified with the keepsake turd in mind.

                • Rita says:

                  If we replaced grains with nuts in our diet permaculture would be very easy. The nut trees would soak up a lot of CO2 emissions.

          • We are not all doomed. But I was wondering where you think we will be getting 100 million barrels of oil per day in 2064? Just list a few locations, please.

            • John B says:

              With the growth of renewables, I doubt we would be needing very much oil in 2064. Certainly not 100 million barrels/day.

              • I believe we ARE running out of oil. And I don’t have that innocent outlook about energy sources appearing in thin air to solve our problems. Producing oil requires an enormous effort, and it’s getting more and more difficult and expensive. This means we probably shouldn’t expect to be producing oil at the very high prices we would require in the future. On the other hand renewables as we have today are much more expensive. This tells me we ought to be more efficient using oil, and put more cash into renewable energy research and development. Right now I have no idea if a solution will be found.

                • Boomer II says:

                  My assumption is that people will do something. It may not be the best solution, but I don’t think people will give up. So talking about alternatives is a reasonable thing to do.

                  As I have said, I get frustrated with people who are so focused on THE END that they won’t allow any talk of potential solutions or work-arounds. No matter what people toss out, if it isn’t oil, the collapse is coming and ALL people will die.

                  I don’t believe that, so I find talk of conservation, downsizing, and alternative energy thought-provoking. Of course it won’t all work, and no, I don’t think the world will support everyone, particularly in a middle class lifestyle, but I think the world will continue to support a percentage of the world’s population.

                • John B says:

                  I think you are wrong on both accounts.

                  The USGS 2000 assessment estimated 3 trillion URR, and upgraded Venezuela in 2009 to 513 billion barrels. The EIA recently estimated an additional 345 billion barrels of tight oil. That’s enough oil to last another 100 years. I wouldn’t call that “running out”.


                  With regards to renewables, Solar has already reached “grid parity”, not only with oil, but also gas and coal, in several US states. Solar will reach grid parity in all US states in a few years.


                  With regards to transportation, the US has now replaced 10% of it’s gasoline supply with Ethanol. With an increasing number of electric, and hybrid electric vehicles also reducing demand.

                  Worldwide, renewables provide 20% of the energy for the power grid.

                  These are huge gains for renewables over just a few years ago. If you were to graph out the growth of renewables and alt vehicles, you would see that fossil fuels will be replaced long before the supply “runs out”.

                • Nick G says:

                  renewables as we have today are much more expensive. This tells me we ought to be more efficient using oil, and put more cash into renewable energy research and development.

                  This is unrealistic – renewables are *not* much more expensive. They are competitive in many places on a marketplace basis, and less expensive if you include external costs.

                  Sadly, it’s clear you’ve been reading talking points created by industries opposed to competition.

      • Sam Taylor says:

        You’re going to die, no solutions to that, why bother? So are all your friends, relatives, etc. Yet still people do bother. Seems to me death should bother people more than collapse. More inevitable and more final.

        • Boomer II says:

          I’m not sure if this is directed to me or to the collapse people.

          I believe we should be working on options other than fossil fuels, both for resource limitations and pollution/carbon dioxide reasons.

          So rather than focusing on the “this won’t work,” “that won’t work,” “collapse is coming and we can’t stop it,” and so on, I like to hear how we might cope with the end of the oil era, and what we do to slow down global warming, and how to cope if we cannot.

          I get frustrated with people who shoot down all ideas and only want to focus on collapse. In which case, I think, “What’s the point?”

          It’s like being born and the only conversations you are allowed to have are about your death.

          • Rowan says:

            Boomer – I suspect you’re missing the point. Collapse IS the answer to the predicament humans currently find themselves in. BAU cannot continue without the concentrated energy that fossil fuels provide. Thermodynamics say so, and their word tends to be pretty final.
            I focus on collapse so that those around me might mentally prepare themselves for a massively lower quality of life – lessen the shock to the system as it were. Men in particular cope badly with a sudden reduction in circumstances; if I can prevent a few suicides by mentally preparing folks then all the better.
            We slow down global warming by collapsing the economy – it might still be too little too late though.
            IIRC the old Byzantium empire collapsed gradually in a managed way (maybe they actually listened to their Cassandras 😉 ) – perhaps there are lessons to be learned?

            • Nick G says:

              I’d be curious to see a clear argument as to why thermodynamics tells us that we need fossil fuels.

              Remember, we’re not in a closed system: the sun is dropping a continuous flow of 100,000 terawatts on us.

              • AndOnAndOn says:

                Maybe you should show how 100,000 terawatts could have built the world (without fossil fuels), 7.3 million humans occupy and by that extrapolation it will show how it will support that many people now. If you can’t then you had better look for another blog to confound with your abstract assertions.
                I won’t mention that you are the same old shill Nick from TOD and still claiming electric cars, wind mills and solar are the answer to all our woes. At one stage your answer to everything including over population was “just buy a Prius”.

                • John B says:

                  M. King Hubbert claimed Solar Power could replace fossil fuels. Are you saying Hubbert was wrong about that?

                  • AndOnAndOn says:

                    Yes and he could have said the moon was made of green cheese too, so what. He claimed nuclear was the answer. Do you say he was wrong about that? Solar power “could”, you get a large amount of “could’s” from the cornucopian dreamers.

                  • Nick G says:

                    Yeah, nuclear would work, though I can’t say I’m all that enthusiastic about it.

                    But, it would work.

                • Nick G says:

                  Well, sure, I was having a little bit of fun, like Watcher often does. Really, when the US could reduce it’s fuel consumption by 25% without any sacrifice at all just by switching to hybrids, how can you not say things like that occasionally?

                  Uhhmmm…how could the world run on 100,000TW? Well, transportation could run on electricity pretty well. Long range driving, seasonal ag, long distance water transport and aviation would probably work best with liquid fuel, but that’s less than 20% of our current liquid fuel consumption, and the tech to synthesize portable fuels is here, right now. Ethanol can provide some, as well. Synthetic fuel would be rather more expensive (at least out of pocket), but the scale would be much smaller, so it would be affordable.

                  Coal and gas, of course, are mostly used for electricity these days, so replacing it with renewable electricity would be pretty straightforward (yes, I know it’s more variable, but there are affordable solutions for that – ask, and I’ll expand on it).

                • Nick G says:

                  Oh, were you asking about scale?

                  Well, take 100,000 TW and reduce by 99% to identify the land area that we could use without too much inconvenience (starting with commercial rooftops). That gives us 1,000 TW. Now, divide 1,000 TW by 7B people, and you get one megawatt.

                  Now, compare that to the roughly .005 megawatts used by the average US resident (including all energy sources).


                  • Nick G says:

                    ooops, lost the seven. That’s about 140 kilowatts per person, compared to current usage of about 5kW.

            • John B says:

              Increases in efficiency, and implementation of alternatives will prevent any sort of energy based collapse.


            • Boomer II says:

              The extreme boomers believe at as soon as BAU ends, homo sapiens face extinction. They believe homo sapiens can’t survive no matter what changes they make.

              I see no reason to believe that. Because I expect that hardships to hit different areas and different groups of people at different rates and levels of severity, I think some people will survive.

              I think life will be different when oil becomes so expensive that it can’t be freely used. But I don’t necessarily see that as the collapse to end all collapses.

              Again, what frustrates me are doomers who are so locked into the idea that the world can’t survive without oil that they refuse to consider any scenarios where oil is phased out or greatly reduced in consumption.

              I think it is reasonable to consider alternatives to an oil-fueled lifestyle. When people won’t consider alternatives of any kind, I get frustrated with them and figure they only want to talk about total collapse, rather than talking about what can and will survive, and how.

              • Lloyd says:

                I see no reason to believe that. Because I expect that hardships to hit different areas and different groups of people at different rates and levels of severity, I think some people will survive.

                That is, of course, cold comfort to the billions who will die.

                This extinction/not extinction dichotomy is a strawman. I suspect that most of us doomers look at the megadeaths involved in an energy constrained future the way I do: I see the suffering and shortened lives of billions of people. No people left, a billion people left…it’s still 7 or 8 billion people who will live short lives that will probably end really unpleasantly.

                I don’t see a coming together to distribute the resources of the world and spread the suffering evenly- mainly because we don’t spread it evenly now.

                I see a continuation of the system we have- because it means years more life for those who can play the system. My dad is 90, and my father-in-law is 95. The average life expectancy in 1900: 46 years. Industrial society has essentially given them 2 lifetimes.

                North Americans and Europeans have a 35% greater life expectancy than Africans. Leveling the playing field (if it were even possible, because North American infrastructure is essentially 200 years of embedded energy and the associated environmental costs) would mean giving this up; if we didn’t, why would anyone negotiate things like carbon reduction and energy use with us?

                So you can argue the extinction thing all you want- it’s a mug’s game. The real issue, as far as broad social change to meet an energy-constrained future in an equitable way globally, is whether you can persuade a majority of North Americans that they should live shorter lives.

                C’mon. Give it a try. Convince me.


                • Nick G says:

                  No, it doesn’t work that way.

                  First, low-CO2 energy is very affordable – recent German analysis showed that 80% reduction of CO2 emissions from their grid would pay for itself.

                  Second, the feedbacks from energy shortages are very immediate. Prices go up, marginally useful consumption goes down immediately.

                  The real problem is the long lag times from CO2 emissions, combined with determined resistance from the investors who would lose a great deal of money if carbon in the ground became worthless

                  • Mark Moreno says:

                    Germany tried the solar/wind renewable energy boondoggle and all it did was astronomically increase energy prices to their businesses and profit-makers while creating real energy poverty for the middle class and the poor. Hundreds of thousands have had their electricity turned off because they can no longer afford it.

                    Now Germany seems to finally “get” the sham that is renewable energy and global warming (which ended 18 years ago, btw) and has been REDUCING solar/wind subsidies while also building 23 BRAND NEW Coal Fired Plants.

                    Meanwhile also look at Australia. The people there dumped their GREENIE-WEENIE government and replaced it with a government that reversed the destructive carbon tax responsible for damaging their economy and prosperity nearly beyond repair.

                  • Nick G says:

                    I gotta ask:

                    Do you believe that evolution is real?

                  • Bill H. says:

                    What’s the matter Mark? Despite all the resources you have at the American Enterprise Institute you still can’t muster a single reference to support your assertions.

                • Boomer II says:

                  So you can argue the extinction thing all you want- it’s a mug’s game. The real issue, as far as broad social change to meet an energy-constrained future in an equitable way globally, is whether you can persuade a majority of North Americans that they should live shorter lives.

                  But that is my point. Life will change. Those changes won’t affect people equally. Some people won’t make it. But for others to make it, they will have to adjust. And I think they will. If not by choice, then by necessity.

                  And as those adjustments are made, it will help some survive.

                  I don’t think any actions will be taken to give everyone in the world an equal life. So saying that as BAU ends, everyone will suffer equally doesn’t strike me as likely.

                  In other words, adjustments will be made, but the results won’t be evenly shared. The advantage localization is that if we show there are benefits within a local area, we might be able to persuade those people to make changes for themselves, if not the world.

                  For example, the advantage of solar is that one becomes less dependent on centralized power generation and transmission. There are benefits for individual communities, so they might be persuaded to pursue that path. Not because it reduces global warming. But because it allows local communities to become more self-sufficient.

                  I think is great if some of you think you can transform the world economy to make it more fair. Or if you think the world economy will become more fair after peak oil. I certainly won’t stop you from carrying out your plans.

                  But I don’t see anything accomplished by pooh-poohing some of the alternative energy ideas proposed here. How does that advance your cause?

                • oldfarmermac says:

                  Hey LLOYD,

                  In case you haven’t heard the news yet we live in a Darwinian world.

                  Now explain to ME why I should give a hoot about the eight billion who are indeed at risk of dying young?

                  I a was born with a brain programmed by a hundreds of millions of years of evolution to give a damn about me and mine.

                  The ones who are going to die a horrible early death are just going to die a horrible early death. There is nothing at all intrinsically special about naked apes.

                  A meteor or something along that line took out most of the life on this ball of rocks a couple of times and the interactions of volcanos and microbes inter tangled with the Milankovich cycles of our planetary orbit wiped out most live a few other times.

                  I am only half serious. Only half sarcastic.
                  JUST a realist. Go ahead and grieve for the billions that are going to die because of overshoot. Maybe you will feel better.

                  In the meantime the survivors will be eating and drinking and dancing and screwing and having a good old time in general.

                  I am more soft hearted and sentimental than most people when you get right down to it but you know what Comrade Stalin said ?

                  ONE death is a tragedy. A million is a statistic.

                  I would gladly condemn a hundred African or Chinese or Vietnamese kids I have never seen to death in order to save the life of a child of my own. Failure to do so would eliminate my own existence in the form of my child. I have NO doubt the average Chinese or African parent would make the same decision. Suicide is for losers.Life is about winners. Winners write the history books.

                  If all this sounds sort of cynical – well that is because being a realist I am also quite a cynic.

                • Dennis Coyne says:

                  Hi Lloyd,

                  A couple of problems with your argument.

                  There are many places where far less energy per capita is used than North America where life expectancy is similar.

                  The second point is that we should transition to other forms of energy because fossil fuels will eventually deplete. If we wait too long then energy will be constrained and this could lead to great suffering.

                  The basic problem is that many think the party can go on forever, hopefully soon higher fossil fuel prices will become a reality.

                  Total World URR for crude plus condensate will likely be between 2700 Gb and 3700 Gb (not including NGL output of about 300 to 500 Gb). My best guess is about 3000 Gb of C+C (including extra heavy oil from oil sands in Canada and Venezuela) and about 3400 Gboe when NGL is included. Reasonable estimates of US LTO output are in the 15 to 25 Gb range and significant production of LTO outside North America is unlikely. Basically LTO is a drop in the bucket and a World wide peak in C+C output will be apparent within 5 years (I would guess 2015 to 2020 with early 2018 my best guess).

                  Maybe when peak oil is more widely recognized, people will realize that coal and natural gas will peak as well (I think total fossil fuels will peak by 2025, possibly as late as 2030, depending on what happens to the World economy when peak oil is apparent.)

                  Bottom line, by not changing our economy to run on less fossil fuel we may be trading high life expectancy now with lower future life expectancy due to energy constraints, unless we act.

                • Lloyd says:

                  Y’all inspired me…here’s a useful chart for use when reading the comments here. Print out and post beside your monitor.


                  • ezrydermike says:

                    good one Lloyd

                  • Nick G says:


                    It’s not just me that thinks Peak Oil is pretty straightforward to fix. Heck, how hard is it to buy a hybrid or plug-in? That takes you 50% of the way, right there (yes, I know, some people depend on used vehicles, but look at China: they sell about 25M electric bikes per year, more than ICE vehicles. And, there’s always carpooling – the average US light vehicle has 1.15 passengers, and gets 22MPG – I think the possibilities for improvement are pretty obvious…).

                    And, Germany is pretty well know for it’s hard headed engineers. They think CO2 emissions can be reduced dramatically, which is a lot harder than fixing PO (but tehir plan just happens to accomplish that along the way).

              • Caelan MacIntyre says:

                “The extreme boomers believe at as soon as BAU ends, homo sapiens face extinction. ” ~ Boomer II

                Don’t you mean, doomers? ‘u^

                But we are already in doom-mode anyway, half-dead, so it’s a moot point in a way. The doom/zombification is taxes. governpimps and their thugs– crony-capitalist plutarchies, I guess.

                On top of permaculture there’s also the re-wilding set, as well as ecovillages and intentional communities. Just people getting it that we need to get out from under this dystopic system’s crushing heel.

    • Ilambiquated says:

      Price optimization is about keeping ahead of the collapse in prices for goods across the board due to globalization and the drumbeat of innovation in production and distribution. It is an attempt to de-commoditize products. That reduces price pressure caused by competition. Another way to look at it to say “marketing” should be called “market destruction”, because market competition reduces profit. There is nothing new about this, but it is getting more and more urgent.

      Backing EVs is unrelated. It is just the government pushing innovation, like the government land handout to the railroads after the American Civil War so they could build a transcontinental railroad. You can argue that EVs are a bad bet, but they are hardly the end of civilization.

      Also I wonder what you mean by simple. EVs are simpler than ICEs. The engine has one moving part. We are shifting to solid state technology in many areas. Of course at the molecular level solid state devices are pretty complex, but nothing manmade come close to the complexity of a potato (yet). so I think mechanical complexity is all that counts.

      I remember talking to Germans the early 80s. It was popular to say we shouldn’t use them because all would be lost if the electricity goes out. Is that what you’re getting at? No doubt the cuneiform scribes bemoaned the introduction of paper as the end of permanent record keeping and beginning of dependence on paper makers. They were right I guess. But civilization didn’t end.

      Also you may be able to browbeat your niece during Thanksgiving Dinner by using funny names for things Republicans don’t like, but I wouldn’t try to be that uncle on line. It just makes you look like a Rush Limbaugh fan.

      • Ilambiquated says:

        Germans saying we shouldn’t use computers I mean, sorry.

      • Sweetie Magic Bun says:

        “Also you may be able to browbeat your niece during Thanksgiving Dinner by using funny names for things Republicans don’t like, but I wouldn’t try to be that uncle on line. It just makes you look like a Rush Limbaugh fan.” ~ Ilambiquated

        That was the point. ^u^
        I even hyperlinked to ‘Leaf Blower’ and ‘Priapus’ on Wikipedia to make it even more ridiculous as part of the ‘happy motoring’ scenario, with of course some flourish with the association of Kardashian and the ‘race to the bottom’. (I just used that one– invented hereon and somewhat to your credit– with some folks in person to some chuckles.)
        While I’m relatively unfamiliar with Rush Limbaugh, from what is understood, a ‘Rush Limbaugh culture’ sounds about right, what do you think? I mean, what inspired my comment that day was also a crossing of the road during Rush hour and a notice of the overwhelming majority of vehicles that had only one person inside… Think of all that energy for all that metal and plastic, etc., being dragged along for just that one person… Meanwhile or nevertheless, some people still want EV’s… presumably for the majority of those one-person V’s?

        But to get back to our hypothetical niece, let’s say I’m yours: How would you explain your job or at least that price optimization bit to me? And/Or does it shaft shoppers?

        And would Graeber agree?

        ~ Caelan M.

  16. Nick G says:

    Let me ask again;

    Are there any examples,anywhere, anytime, of the ideal civilization that you’re talking about??

    • Caelan MacIntyre says:


      Because ‘ideal civilization’ (oxymoron?) presupposes one; and I don’t recall speaking about one as a working proposal.

      • Nick G says:

        Well, I’m glad we clarified that.

        Some of your writings suggest that modern civilization has destroyed our souls. That implies that at some point in history humans were in a state of grace and our souls were in nirvana.

        While I agree that modern civilization has a *long* way to go to get to psychological health and some kind of spiritual “something”, I’d say that the average person is happier and less stressed than in previous eras: low infant mortality, long life, indoor plumbing and reliable food supplies go a long way towards greater mental health.

        We’re just stepping off the first level of Maslow’s hierarchy…

        • Caelan MacIntyre says:

          Maslow’s Hierarchy of Needs?! Civilization really seems to be putting the cart before the horse on that one! It would be LOL if it weren’t so tragic. Modern industrial civilization isn’t going anywhere and worse. Wake up and smell the species disappearing.

          It may imply a ‘fatal mutation’ of sorts, a paradox, a conundrum that we have to transcend if we want to get out of ‘overshoot(/civilization-crash) loop’, but that we may not, and may be like most, if not all, species, a la ‘Are Humans Smarter Than Yeast’. We’re now facing multiple wavefronts of perfect storms.

          And if you were with me as ‘Tribe Of Pangaea- First Member’ on ‘The Oil Drum’, you may have caught me sort of suggesting that kind of thing in different words, with a link for emphasis to a video of the ‘Dawn of Man’ scene from ‘2001, A Space Odyssey’.
          You may have also recalled my mention of how sometimes we don’t see the effects of things in our immediate space and time. I even posted a comic about it that Fred Magyar liked and re-adapted. The one with the large stone dominoes going far away and then back in a circle to (crush?) the very person who toppled the first one?

          I’d say that the average person is happier and less stressed than in previous eras *[which eras? The Great Depression? stats?]: low infant mortality, long life [increasing population pressures; myopic view of the long-run implications of decline/collapse], indoor plumbing [no waste recyling; peak phosphate; sewage issues related to increasing natural disasters; potential toxin released back on farms from sewage treatment systems] and reliable food supplies [overfishing/problems from farmed fish; green revolution soil degradation and salination; GMO’s/genetic pollution & dietary issues; monoculture and habitat loss/pesticide issues etc.] go a long way towards greater mental health [stats? I hear there’re greater mental health problems, including alienation, isolation, lonliness, overwork, increasing social unrest]. ~ Nick 6

          * my what-planet-are-you-on brackets

          You can say whatever you want. Right up until your dying breath by your own hands. You can be disingenuous, deceitful and deceptive, even to yourself.

          Or an Emperor with no clothes.

          …In fact, you may have recalled my posting on TOD, the album cover for Supertramp’s, Crisis? What Crisis? album. That guy represents some people.

          As old as the album is, it’s more relevant than it ever was. Sad that.
          It is more relevant than it ever was perhaps because many people look but don’t see, act and say accordingly.

          • Nick G says:

            Yes, we do seem to be repeating the same arguments.

            So, would you like to make progess on this? Or would you like to endlessly say general vague things?

            If you want, we can try to deal with one specific things, and nail it down. We could discuss whether CO2 emissions could be eliminated in a cost effective way, for example. Or whether phosphorus is going to deplete soon.

            Pick something specific, and we can talk about it, rather than endlessly talking in circles…

  17. Watcher says:

    Okay gonna bring Mike and Lloyd’s late posts over, just so they can be admired haha

    Watcher, I agree with Ron and I’ve said as much a number of times; the shale oil industry will not be “bailed out.”

    Relying on shale oil to achieve energy independence in the US is physical impossible; wells cannot be manufactured fast enough in sweet spots to offset decline rates and they are already, IMO, running out of room. Energy independence was a myth propagated by the shale oil industry that unfortunately lots of people bought into. It was never going to happen.

    Conventional resources, thousands of very small stripper well operators like myself, deep water in GOM, shale gas, everything hydrocarbon related will then also have to get “bailed out,” whatever that means. If the oil industry gets bailed out then wind and solar and bio fuels are going to whine for help, more help, too…ain’t gonna happen.

    I don’t think anybody tells Exxon what to do, least of all the American government. They don’t want those stinking shale wells, I promise you; XTO comes to mind.

    Mac is correct, the political aspects of a bail out are very complicated. Furthermore, there is a very real, very strong anti-oil sentiment in this country. Americans are not smart enough about oil (ie. peak oil) to accept a bailout of an industry who “FRACKS.” This big blowout underway in Pennsylvania, one or two more groundwater issues in N. Dakota, whatever; Americans will riot over frac’ing. They almost are anyway. Do you think Americans will stand for it’s government to fund it? No way.

    I don’t think the shale oil industry is too big to fail. Excuse the analogy but shale oil is liking taking Advil for Stage 4 cancer. It was never the cure. Not all jobs created by the LTO business will be lost, not all supporting businesses will fail. There are 15,000 new wells out there that will still keep on producing.

    The LTO industry needs to sort itself out and this price collapse will see to that. It is a good thing for many reasons. The pace of shale oil development was reckless and ultimately resulted in oversupply that assisted in the collapse of prices. It shot itself in the foot. In the process it shot me and many other conventional producers in the back.

    This will sort itself out. However, I share your concern for how; the debt those boys piled up is staggering. I think if the shale oil industry stopped drilling wells tomorrow it could still pay that debt off from production revenue. Maybe that is what the FED says to the money boys; make them reduce your debt by 75%, then and only then can you turn them lose again. My guess is that is precisely what is going to happen anyway, without the FED. The shale oil industry will slow its well manufacturing to a crawl and get de leveraged, big time. That will be painful, but necessary; then when prices get higher again they can crank it back up.

    What I most definitely see happening is significant tax breaks, incentives, higher IDC’s, depletion allowances, other kinds of things coming down the pike to drill more wells in the US, including shale wells. Americans will have to get those kinds of incentives are not subsidies, but at some point in the future it won’t much matter what Americans like or don’t like. They’ll tolerate whatever to be able putter around in their vehicles.



    Have been reading Watcher’s thoughts on Too big to fail, and the other threads on whether Saudi and Russia are trying to harm US interests (or just acting in their own, or not even planning at all) and have to raise an alternate viewpoint.

    I don’t think a bail-out is practical, or, if attempted, that it would result in anything useful. A scenario: you guarantee a certain price support for oil from the Bakken. You’ll let every prospect be drilled? Only the ones currently in production? Some kind of lottery for permits? Some kind of quota?

    It’s this last one- Some kind of quota?- that’s the issue. It’s a slippery slope.

    I come from Canada, and from systems like the Milk Marketing Board and the Canadian Wheat Board, quota systems designed to control prices and to maintain the profitability of producers.

    The US has used quota to support oil price in the past – The Railroad Commission of Texas. OPEC modeled itself on the RRC.

    A better bet than a bailout (though still unlikely) is some kind of international quota- maybe global, maybe continental. And if the GOP can blame it on Obama (“he’s a whacky socialist, but he’s the POTUS! We didn’t have a choice!”) the actual and propaganda benefits of quota-induced price support- continued lower imports of oil, employment and GDP effects, national security boilerplate (you can maintain your ability to run the defence machinery, etc.), spreading the cost of imposing the quota to the rest of the world- are quite compelling. If you can work around the fact that it goes against GOP dogma, you’re golden…of course, the fact that the GOP can accept its own dogma in the first place shows how mentally flexible they are.


    • Watcher says:

      Addressing a few items:

      conventional resources, thousands of very small stripper well operators like myself, deep water in GOM, shale gas, everything hydrocarbon related will then also have to get “bailed out

      Don’t know why. When GE was bailed out, the same money wasn’t offered to, hell, go down any list of big industrials. They didn’t get it offered. But most of my point is the pandora’s box of precedent in play here. Bailouts are done when the system’s wheels might stop turning. They are TBTF. You bail them out so blood doesn’t start flowing in the streets.

      I don’t think the shale oil industry is too big to fail. Excuse the analogy but shale oil is liking taking Advil for Stage 4 cancer. It was never the cure. Not all jobs created by the LTO business will be lost, not all supporting businesses will fail. There are 15,000 new wells out there that will still keep on producing.

      Oh, there doesn’t have to be any attempt to posture shale oil as a “cure”. Hell, if you’re here on this blog, you sign onto the reality that there is no cure. We’ve examined this before. If people are starving in cities for lack of food shipment, and there is oil known to be in North Dakota but it is impossible to access it at a profit — it will still be accessed. No government would hesitate to get it if that’s what it takes to get food to people. And that, btw, is not a different situation. That is just an extrapolation of TBTF.

      You’re right. Not all jobs will be lost in the next 3 months. But the damn wells are near dead in 2 years. What does the budget look like for 30 bpd at $55/b and a water cut of 50% and $6 million still owed on that well with loan retirement due in 3 years at $2M/yr?

      You are dead on correct in your next para — that debt can’t be serviced by dying wells. And at $55 they can’t retire it early from the newer wells. They are all screwed. Ron (and I think you) are looking for big guys to bail out small guys — but who wants to **buy** that debt? CLR and EOG are in debt to the gills. They don’t want to add any. That debt can threaten Lehman-like events, and then we’re right back in TBTF territory.

      I don’t think a bail-out is practical, or, if attempted, that it would result in anything useful. A scenario: you guarantee a certain price support for oil from the Bakken. You’ll let every prospect be drilled? Only the ones currently in production? Some kind of lottery for permits? Some kind of quota?

      Of course it’s not practical. Nothing that went on in late 2008 was practical. As for what would be the bailout mechanism, THAT is worth speculating on.

      1) Bomb somebody in the middle east. That is absolutely the most straightforward path to overall solution.

      2) Have the Fed backstop all HY fracking loans. The loan is guaranteed to be repaid. The lenders drop their interest rate and keep lending. But obviously the frackers would go hog wild. Their drilling costs become zero. If they don’t pay it back, the Fed will. They can drill 10 bpd wells and make a profit. So the Fed would have to restrict drilling. Quite an ugly thing, but 2008 is loaded with precedent. For example, even today, Citibank is not allowed to increase dividends to shareholders without permission from . . . I think Treasury, maybe the Fed. The point there is, haha, forget slippery slopes. That became meaningless in 2008. When was the last time anyone was concerned about moral hazard?

      3) Get clever (Mike alluded to this) and do things that look less like a bailout, but is a bailout. Take over disposal water efforts with a new government agency, because the shale people can’t be trusted to do something right that is so environmentally sensitive — so the gubmint will fund that. It’s a significant cost eliminated from the industry.

      4) Tax credit this tax credit that. Reward the companies for capturing flaring.

      In general, stuff like that.

      But at $55, I suspect that’s peanuts and can’t turn the tide. No question a “bailout” of the horrible frackers would be a hard sell. The Fed doesn’t stand for election.

      • Ves says:

        Hi Watcher,
        I think Fed can’t do it this time since they can’t keep the price high enough long term with any of the suggested methods.
        1) military targets – no available oil targets that would move the price without getting blowback.
        2) If Fed restrict drilling, then they the one that are cutting the global production. So cut in “natural” way by letting shale players going out of business. At least this way they can pretend they have clean hands.
        3 )taking environmental costs – too costly, messy and still does not guarantee the price go up.
        When car industry was bailout out we have to remember they did no save all of them. A huge part of the industry had to be let go.

        • Watcher says:

          Item 1 you’re probably right. It would buy time, but not much.

          Item 2 . . . depends on perspective. Mine is the overall global system hangs by a thread. Teeters on the brink. All sorts of other metaphors. If you just let it die, the US loses 3.5 mbpd within a couple of years. Returns to importing. That’s money draining out of the country. Less money because the price is lower, but money draining out nonetheless when all that is managed is 2.5% GDP anyway, and that was with QE3 stimulus.

          This is not the sort of stuff that thickens the thread.

          • Ves says:

            3.5 mbpd is only problem if they foresee that they cannot import it from overseas for whatever reason. Then, yes, that 3.5 is huge.
            problem is we really don’t know what is at stake. it could be huge but we just don’t have that info.
            my gut feeling is that depletion in some big conventional fields (Alaska, North Sea) are bigger than we think and that was the main motivator for shale development. Yes, if banks blow another bubble and make some money at the same time we know it is to be expected from the banks 🙂 but that is side effect.

      • Lloyd says:

        Hi Watcher.
        I think about this, and I keep coming back to quota.

        The real questions are: 1) How much curtailment will result in a price rise? and 2) What is the real rate of production decline and CNOE for a) the USA and b) the World?

        And of course, no one really knows. All is guessing and forecasting and hoping.

        So let’s think about scenarios. How about a US/Canadian continental quota pact? Put everything under a Joint Oil Authority: the potential for 17 million BPD. Would losing 2.5 M BPD raise the price? Say, a 60-40 split in the US favour (because I’m a realist, not because it’s fair.) Would the industry be served by auctioning or dealing quota out by lot, so the Bakken isn’t a free-for-all, and production would be stable? The quota would have to allow for differing temporal production profiles from existing conventional fields, megaprojects like the OilyTar sands, and short-lived Shale and deep water wells.

        For how long? Would 5 years be enough to take us past peak and to a point where we have a terminal decline and cannot raise production fast enough? Maybe 3? Maybe forever?

        And those decline figures. You’d have bureaucratic weasels watching prices and production and moving quota up and down- to what end? Raising revenues and employment in the oil patches? Keeping exchange rates high? Or trying to keep gas prices to consumers stable (as opposed to “low”) and exchange rates low to encourage international trade? Or to purposely crank back oil usage to ease climate change? Or something so flexible the party in power won’t change the basic mechanism, so they can make it do any of these things?

        What if it was tied to higher taxes at the well head? Instead of taxing at the consumer level, take a piece from the corporations? Maybe the price for quota is not just for new quota, but for grandfathered quota?

        It’s all a crapshoot, and my gut feeling is that it would have to be in the aid of some kind of vision. Most likely a political vision that someone thinks will help them get elected…not something in the national or global interest.

        What makes me think there is more than a 0% chance that it might happen is Cuba. Obama is a lame duck with a hostile congress, and is doing weird stuff. He obviously thinks that improving relations will help him politically, and maybe economically. I think he has a plan around Cuba, and that we haven’t seen all of it yet.

        We’ll have to see if he has (or can develop) a plan for oil.


  18. oldfarmermac says:

    There is no doubt in my mind that we are in overshoot and that we are going to lose some population and some complexity of both the technological and commercial kind in the not too distant future.

    Societies and civilizations have collapsed before.Some organizational and technical complexity has been lost in many ( maybe all) of these prior known cases. But it is rare at least and maybe even unknown for a society to degenerate beyond a certain point. Advanced societies to my knowledge in Europe have rarely if ever regressed to the hunter gatherer stage.Some in South and Central America may have done so but not to my certain knowledge.

    As I see it we are on a global basis going to lose some technology and some commercial and organizational complexity but it is not a foregone conclusion that all societies or all countries are going to collapse any time soon.

    Power and resources both natural and human are very unequally distributed over the globe and some countries such as the US and Canada have hogzilla’s shares of one or both.Some countries are also very favorably situated geographically to defend themselves in case of need -again including the US and Canada.

    If it were to become necessary this country could and would go on a wartime economic footing and we would survive just fine without importing a single thing excepting a few minerals needed only in modest amounts- and we could survive without those minerals as well.

    Maybe there might not be enough of us to support the computer industry at the current cutting edge level but we could still manufacture computers. Pretty good ones in fact. We would have a huge problem with unemployment without oil imports for quite a while but we have the means to feed and shelter fifty million unemployed people for a long time if we have to. We could be building hundred mpg cars in a year on a wartime footing and have most of our long distance trucks on flat cars on trains in a year too if the Marine Corp and the SeaBees were put on the job and allowed to commandeer equipment and manpower as needed.

    We could put every carpenter to work remodeling older houses for energy efficiency – given that we would be feeding them and sheltering them on welfare otherwise if no new houses were being built.

    Now I realize that getting three hundred million people to do anything at all other than watch tv is a monumental job but it is a job that has been done over and over again since the beginning of the last century when countries went to war.

    When conditions get bad enough we WILL go an a wartime economic footing. Whether we succeed maintaining some semblance of life as we know it – of business as usual – is an open question.

    But if the cards fall in such a way that we get started before things deteriorate beyond the point of no return we have an excellent shot at keeping the lights on and the water flowing and food in the stores.The three ton beer beer hauler will be history and the micro mini pure electric with a twenty mile range will rule the road insofar as the driver can pick a path thru the electric bicycles. And given that we have so many roads already traffic jams may well be a historical novelty except in gentrifying city cores.

    Anybody who thinks it cannot be done because the three hundred million cats cannot be herded should study the history of WWI and WWII.

    When ALL the chips are down Leviathan , the modern nation state , can and DOES go into defensive emergency survival mode. For some reason a hell of a lot of people seem unable to grasp this unquestionable fact -even if they have the medals and old uniforms and letters their parents and grandparents who worked in the munitions industries and toted the guns and flew the planes left as family heirlooms.

    When I use the word defensive it should be understood that the best defense is often a proactive offense. If the enemy is circumstance rather than another country then the state will go on a proactive war footing to manage circumstances.

    With the possible exception of a runaway climate that gets so bad we can’t farm and can’t live we are not looking at any problems that are INSOLUBLE. The issue is whether we will get our asses it gear and solve them.

    I don’t think that will happen on a world wide basis but with a little luck we Yankees and a few other countries will get enough Pearl Harbor type bricks upside our collective head to get our undivided attention and hold it long enough for us to actually realize we have to DO SOMETHING.

    Ya don’t won’t to get caught in a place such as Mexico or Egypt. Getting out may prove to be impossible.

    And you don’t want your retirement money in energy intensive industries that depend on discretionary income such as the airlines. The people who can’t afford to fly are going to insist that nobody else can either at some point in time and they are likely going to get their way.

    • Nick G says:

      How to eliminate US oil imports, in a matter of weeks:


      The horror.

      • oldfarmermac says:

        It would be unspeakably horrible if Walmart were to buy up some apartment buildings near their stores and offer the apartments to their employees on a preferential basis wouldn’t it?

        Especially if the company also paid one of those employees to haul people back and forth on a regular schedule with a van. The van could bring in twelve people for their shift and take back to the apartments twelve people going off the clock. Driven both ways by an employee on the clock of course.

        One twelve passenger van running six or eight trips a day could eliminate fifty or to a hundred or more automobile commuting trips on a daily basis.

  19. FreddyW says:

    Hi Ron,

    Thanks for interesting posts. I checked in what counties the wells have been drilled depending on file number. This is what I found:

    File   Mountrail  McKenzie  Dunn  Williams  Other counties  Av. production start
    16xxx    29%       15%       26%     18%      12%            4/2008
    17xxx    45%       16%       25%      5%       9%            4/2009
    18xxx    39%       17%       20%     14%      10%            7/2010
    19xxx    26%       22%       14%     24%      14%            6/2011
    20xxx    21%       27%       18%     20%      14%            1/2012
    21xxx    18%       26%       16%     25%      15%            6/2012
    22xxx    24%       23%       17%     22%      16%           10/2012
    23xxx    16%       30%       16%     22%      16%            4/2013
    24xxx    19%       32%       15%     17%      17%            8/2013
    25xxx    25%       32%       13%     14%      16%           12/2013
    26xxx    19%       37%       11%     21%      12%            4/2014
    27xxx    27%       26%       13%     20%      13%            7/2014
    28xxx    33%       28%        6%     17%      17%            9/2014

    Note that wells that are still in confidential status are not included.

    No major changes, but as you can see, it looks like they are going back to Mountrail in 27xxx and 28xxx. I did some analysis some time ago, if you remember, why water cut has increased for Mountrail the last months. At least part of the reason was because of more wells in northern and western Mountrail. So moving away from sweet spots could be the reason. Very interesting that this increase in water cut and decrease in oil production seems to continue and get worse.

    • FreddyW says:

      Sorry, I made a mistake. The production start months should be:


      • Watcher says:

        Looks like Dunn is being abandoned. So down to 3 counties.

      • Okay, fixed it.

        • FreddyW says:

          Thanks, and thanks for fixing the table. You did it in html?

          • I did it with the “pre” html command. You can use that to. Just do a

            < pre >
            < /pre >

            And that’s all there is to it.

            I put spaces between the chevrons and the pre so it would not work here as an actual html command. When you do it leave the spaces out.

            • Dennis Coyne says:

              Ron only an editor can use the pre function, I would change it, but I couldn’t figure out how. You can test this by logging out and then posting as Ron P (without logging in) and you will see that I am correct.

              • Why don’t you try it and let me know. 😉

                • Dennis Coyne says:

                  I already have tried it.

                  1 8656 8656
                  2 11517 20173
                  3 9256 29429
                  4 8275 37704
                  5 7486 45190
                  6 6809 51999
                  7 6263 58262
                  8 5751 64014
                  9 5404 69418
                  10 5080 74498
                  11 4731 79229
                  12 4475 83704
                  13 4290 87994
                  14 4065 92059
                  15 3904 95964
                  16 3702 99666
                  17 3582 103247
                  18 3398 106645
                  19 3290 109936
                  20 3173 113109
                  21 3064 116172
                  22 2992 119164
                  23 2922 122085
                  24 2869 124955
                  25 2805 127760
                  26 2708 130468
                  27 2630 133098
                  28 2612 135710
                  29 2535 138245
                  30 2491 140736
                  31 2396 143132
                  32 2381 145513
                  33 2329 147842
                  34 2305 150147
                  35 2252 152400
                  36 2253 154653
                  37 2202 156855
                  38 2231 159085
                  39 2200 161285
                  40 2125 163410
                  41 2085 165495
                  42 2048 167543
                  43 2039 169582
                  44 1965 171546
                  45 1951 173497
                  46 1950 175447
                  47 1892 177339
                  48 1830 179168
                  49 1839 181007
                  50 1885 182893
                  51 1863 184756
                  52 1876 186632
                  53 1859 188491
                  54 1745 190236
                  55 1684 191920
                  56 1720 193640
                  57 1888 195527
                  58 2292 197819

                  Above I tried to use the pre tags “” was before the data and “” was after it, but WordPress strips out the command for most users.

  20. Petro says:

    Enjoy the time with your family and friends Ron.
    You truly deserve it!

    You certainly did NOT need the official numbers to prove you right…you have understood and generously explained “the truth” clearly in your postings on this respectable forum for quite sometime now.
    These numbers (and more to come…soon…) will make it crystal clear even for those “…whom the bell DIDN’T toll…”, or those who were unable/incapable/unwilling to hear it EVEN after had been loudly sounded by you and a few others.
    Already too late…, but I am going to say it anyway: way too late by the time these numbers show “the truth” to everyone!
    As you probably may know (from my few replies here), I do not see the light at the end of the “tunnel” we ALL are in.
    Let us find comfort however, in the fact that we did try …be that as it may!
    Happy Christmas and Prosperous New Year to you and the family!
    Even though the (near) future might stubbornly contradict the “Prosperous” part of my wish, I wholeheartedly and sincerely mean it!
    Judging by the time, effort, patience and helpful info you so generously donate, very few deserve it more!
    Thank you.

    Be well,


  21. Boomer II says:

    There have been on-going discussions about the usefulness of solar and wind.

    Here’s a look at how California plans to increase energy storage.

    • Petro says:

      …waste of time, dear Boomer…junior…
      Sorry, but there is no other direct way to convey this!
      Because you read forums like this (and I presume others like it) I think you want to know the truth or versions close to it, therefore as a rule of thumb (whatever that means) IF it is published on: NYT, LAT,WaPo,weekly standard,reuters,AP,NBC/MSNBC/CBS/FOX/ABC/Buzzfeed/and/or said byRUSH LImBAugh/Rachel Madows/Bill Oreily/Sean Hanity/Chris Mathews/A. Cooper/Wolf Blitzer etc.etc.etc…name one-named them all… do NOT continue reading!
      Waste of time!
      They are pretty much the antithesis of what Ron and this respectable forum write about.
      Let me make it visually simple for you and let me know if you need more acurate material to digest and expand your vision as to how “bright” the future will be:

      Be well,

      • Boomer II says:

        I’m just passing along some storage plans. Whether not you believe in solar and/or wind, projects are happening.

        We’ll see how they play out.

        People are going to continue to experiment with alternatives to gas and coal for energy generation. If they work for the specific purposes for which they have been installed, mission accomplished.

        • Petro says:

          Fair enough and good luck!

          Be well,


        • Watcher says:

          Always thought those projects looked really fragile. Doubt anyone is insuring them. How could there be any risk history for the insurer?

          Someone will toss a load of bricks at them, and gov’t won’t fund them again.

          • oldfarmermac says:

            ”Someone will toss a load of bricks at them, and gov’t won’t fund them again.”

            I suppose this is intended as sarcasm and is intended to convey your opinion that these systems will not work because they will be politically sabotaged.

            The ice based system is based on tech well over a century old and well made refrigerators and ac systems often run decades at a time without a service call.

            The battery based system is using a very substantial bank of batteries of a sort known to be very reliable and durable – if expensive- to accomplish fine tuned balance between supply and demand on a second to second basis. This job must be taken care of no matter what and the battery systems are now both cheaper and more reliable than the older mechanical/electronic systems being displaced .

            Durability of these particular batteries may remain to be demonstrated but it is my understanding that the systems mentioned are modular and thus switching out individual batteries as they go bad is easily and economically accomplished. Batteries ain’t what they used to be. There are batteries in Prius autos today that are subject to vibration and extreme temperature changes that are still about as good as new after a decade of service.

            The possibilities involved in storage are enormous and the technology IS NOT THE PROBLEM to a large extent any more.The problem is that one , juice is still so cheap we are not seriously TRYING to implement storage, and two, that current efforts are focused in the wrong place- utility scale.

            Generation efforts are also focused in the wrong place. A law forcing the abandonment of inefficient lighting and the universal adoption of led lighting in residences would eliminate the need to burn millions of tons of coal in a heart beat as well as saving all homeowners who have not already switched a lot of money.

            Coal not burnt is coal that does not have to be paid for and also means new capacity that does not have to be built or built as replacement of obsolete capacity that has to be phased out.

            We hear a lot of peeing and moaning about the closing of coal fired plants but the reality is that most of the ones closed so far have been within a few years of the scrap heap anyway in addition to being inefficient fuel hogs.

            Ways to build cost effective utility scale storage will probably be found and implemented WHEN the cost of generating peak load power gets to be HIGH enough- just as tight oil was exploited when the price of crude got to be high enough.

            The tech needed to make local scale storage – down to house scale- is mature and readily available and awaits only the cost of electricity going high enough to force early adapters to pay the price of buying stuff PRESENTLY produced only in small quantities and PRESENTLY installed only on a custom service job basis by skilled technicians after obtaining pain in the ass permits.

            Right now for instance I could buy a few gold cart batteries and install led lights and a few solar panels and have ample light any time- but the COST of doing so is determined mostly by the cost of installation of the panels and wiring and batteries- not by the cost of these things purchased down at the local home improvement big box store.

            The solution to this problem is not an engineering or business solution but a political solution- the building codes need to be standardized and streamlined so that such installations are perfectly routine just like installing a water heater or furnace is routine. Faster easier MUCH MUCH less expense for labor.Much much less frustration for the homeowner jumping thru hoops.Many many times more inventory in the store with the increased volume forcing down prices all along the way from manufacturer cash register.

            A couple more conditions will need to be met to get this small scale storage ball rolling too. The home owner needs access to off peak pricing to charge his batteries. And it might still be necessary for the price of juice to go up a few more cents during peak load times to make the switch a dollars and cents no brainer for the homeowner.

            But small scale energy storage is going to be A VERY BIG NEXT NEW THING as sure as sunrise within another decade or so – assuming Old Man Business As Usual manages to hobble along that much longer. I believe he will make it at least that long and have high hopes he will make it another twenty or thirty years-at least here in the LAND o’ the Brave and the Free ..

            Right now the immediate future of the renewable energy industries looks sort of dim with the repugnant party taking control in DC but in the long term dollars and cents arguments are the big artillery and the renewables industries are going to win the dollars and cents arguments hands down no question whatsoever in the long term.

            Conservation, efficiency, and renewables are going to rule. The only question is do we wait for prices to determine the switch over- and maybe wait until too late because we SUDDENLY run short of affordable fossil fuels one day and are thus UNABLE to make the switch- or do we push the transition along as best we can as fast as we can and hope for the best?

            Right now just about every Mcmansion in suburbia has an internet connection.It would cost peanuts at the most – compared to ten years worth of electricity for hot water- to mandate that new water heaters have controls installed that would allow them to run MOSTLY on off peak cheap wind and solar power when the signal arrives that such power is available. Most houses have plenty of room to install LARGER water heaters with MORE insulation that would need to run LESS OFTEN on regularly priced juice.

            A house with an unused or little used basement- and there are tens of millions of these- could very easily have a truck load of stone put in an insulated box down there with a heating element and thus store a few days worth of heat bought at dirt cheap off peak rates when the wind and sun are going gangbusters.

            I have met a local man who converted an electric golf cart into a road legal car here in Virginia. Our DMV does not make such a thing easy but nevertheless he did it in his backyard garage at a very reasonable cost and he goes anywhere he wants with it within ten miles of his house on side roads and city streets with low speed limits.He is not quite down to zero direct fossil fuel use with his (enclosed) road going cart- it has a propane fired heater for really cold days.

            This guy being retired actually gave up his conventional car since he seldom needs to go any farther.

            Gasoline and diesel fuel are eventually going to be ten bucks and when that day comes then Joe Sixpack will be glad indeed to own a short range electric vehicle and drive his conventional car or truck as little as possible.

            Successful adaptation is possible on an individual and a society level. The question is whether we have enough brains, collectively speaking, to do so.

            I do NOT sleep well when I think about three hundred million monkeys more interested in football and video games and getting laid today than in thinking about survival ten or twenty years from now.

            When I get to thinking about six billion poor monkeys wanting to live like us rich monkeys I don’t sleep at all and think about firing up the backhoe and building a bomb shelter and stocking up on dry beans.

            When we talk about the long haul- meaning BEGINNING from forty or fifty years FROM TODAY I have no real idea how much industry and technology can be maintained over the following centuries. My guess is A LOT.

            We have more than enough fossil fuels and water and other natural resources to get thru the next few decades- enough for most of us in richer western countries at least- assuming we use these resources wisely.

            A HELL OF A LOT can happen in one lifetime. My grandparents lived thru the transition from horses and mules to tractors and trucks and cars. They grew up without either electricity OR internal combustion engines but they died with telephones and satellite tv.

            IF we were to spend half as much on a regular basis on renewable energy as we do on warplanes and war ships we would have nothing at all to worry about in terms of energy supplies long term.

            • SW says:

              I’ve been working on renewable energy my entire life and am about to retire. I never expected to see its deployment on a large scale in my lifetime. I have been doing this work for future generations. It used to be that we did things for what was charmingly called ‘posterity’. Today, not so much. If Wall Street can’t make a killing off of it in the next five years no one is interested. Family values and all that…

              • wimbi says:

                That’s why I have just gone ahead without any funds from anybody but myself.

                Direct experience has given me assurance that indeed energy per se is not by any means a barrier to a happy life by far.
                1) quit all the frivolous stuff, and switch that stream of assets toward sola/wind. Do or support doing the things most NEEDED, not all the crap we might want to do.
                20 Trim all energy requirements so solar will easily handle it.
                3) Use carbon only to support the solar/wind essentials.
                4) Make big noises to doubters that all this good stuff is not only good, but fun.
                5-And, by the way. Fatal if NOT done

                Now, stand back and watch the others slowly go this way because they see living proof on the ground that it is possible- and beneficial to every one

                Except maybe to that valiant rear guard working night and day in a hopeless battle to find more and more and more poison to toss into the air they don’t own,.

            • Watcher says:

              I meant bricks somewhat literally. Fragile things and rebuilding won’t be funded. Excellent high media coverage terror target. Oil fields less delicate.

              • Hillson says:

                Oil pipelines very delicate.

                • oldfarmermac says:

                  Very true but also true that when the shit is in the fan that an authoritarian government can easily kill anybody who approaches within a half a mile of a pipeline.

                  So far the people in power are not willing to really go bare knuckles no rules except for people like the Stalin and Hitler and Hussein. Nobody blew up pipelines is Stalinist Russia or Nazi Germany and nobody will blow up pipelines in other places very many times once the shit is really in the fan. The authorities will send a few dozen troops to murder a few hundred local people nearest the place it is blown up after a few times and each time after than they will send more troops and kill more people.

                  ONE side or the other will wind up in control. Once there is a winner the winner will have an incentive to keep the oil flowing.

                  There is no doubt in my mind that the world will go bare knuckles to the point one side or the other is unable to stand up again in the not so distant future.

                  The thing that scared the old soviets more than any thing else imo was the antipersonnel neutron bomb. Set one off over a city and give the rats a few months to clean up the carcasses and march in unopposed. Minimal radiation exposure to even the first wave of invading troops.

                  A country such as the US could literally fumigate the Middle East with such bombs in a few months time except for the fact we are nice enough not to.

                  I’M NOT REALLY bloodthirsty. I am just a realist not afraid to think about real possibilities.

                • Watcher says:

                  Nice try. So are wires on poles. The measurement of fragility is confined to the source.

                  Big panel farms are just stupid. You don’t even need a nuclear weapon on your missile to wipe out billions of dollars.

                  • TechGuy says:

                    “Big panel farms are just stupid. You don’t even need a nuclear weapon on your missile to wipe out billions of dollars.”

                    Hurricanes, Tornadoes, Brush Fires, Hail storm, even a well placed lightning strike. Semiconductors don’t stand a chance against mother nature!

                  • Techsan says:

                    Nonsense. Solar panels are fairly rugged, designed to handle golf-ball size hail.

                    I’ve had panels on the roof for ten years now, with zero damage, here in Texas where we do indeed have tornadoes, hail, etc. etc.

                  • Caelan MacIntyre says:

                    Technology without freedom is practically meaningless anyway.

              • oldfarmermac says:

                Well now-I agree that if and when the shit is well and truly in the fan that lots of bricks are going to fly.

                But there are going to be plenty of well armed and often otherwise unemployed people standing around getting paid to make sure hardly any bricks hit high dollar industrial infrastructure.Paying such people will cost hardly nothing above what it will cost to support them on welfare anyway and so I do not expect much grid infrastructure to be sabotaged.

                The idiots who burn down and rob stores know there are other stores to be burnt and robbed but it won’t take them long at all to figure out that when they shoot a transformer full of holes in THEIR neighborhood they can’t watch themselves rioting on tv the next day.No juice. No cold beer. And the crapper won’t work either in a lot of cases.

                Plate glass shop windows and luxury cars are another story altogether.I can see a time when some poor kid will throw rocks at any nice car if the driver is dumb enough to go into the wrong neighborhood or maybe even out on the freeway.

                The people who believe law enforcement can contain such behavior mostly haven’ t ever bothered to learn any thing about the art of subversive warfare. Spy and sabotage cells are kept as isolated as possible to keep one rat from ratting out the rest when the cops get started with the rubber hoses and nut crackers.

                But with the internet to teach every body how to copy cat with no organization necessary- only the kid dumb enough to go back on the net and brag about dropping a cinder block on a Mercedes from an overpass is apt to get caught.

                Cops generally are quite successful at catching people once they identify the ones they want to catch.

                But suppose any one of the law abiding regulars here decided to go out and set the woods on fire along side some country road?

                Unless we were caught on the security camera at a nearby country store passing by at three am or some other such bad luck the cops would have as approximately zero idea who to look for.

                Barring that bad luck country store camera the odds of getting charged would approach zero if the perp keeps his mouth shut.

                Now as to whether we will have the sort of troubles they have in Sand Country – suicide vesters and bombs going off almost at random just for the sake of killing people- I do not see that sort of thing being a problem HERE.

                Our underclass is not that easily motivated and mostly not dumb enough to put on a suicide vest.We have our Jesus freaks to be sure but I know a whole lot of that kind personally and suicide bombers they will never be.

                The Bread and Circus formula still works and bread is still cheap here and the circus is actually just about free these days given video games and Facebook and You Tube. People will riot here when things get tough enough but they imo will not tear down the power lines. That turns off the electronic circus. 😉

            • AndOnAndOn says:

              The thing is, no so called renewables were viable in the world created with CHEAP and plentiful, high EROI hydrocarbons and coal. As Fossil Fuels became more expensive renewables came along like vultures or a leech attaching to a disabled host. They are all heavily subsidized and can’t stand alone in any way shape or form. They need FF’s to be created and they absolutely rely on FF’s to remain serviceable. They need a FF created and maintained grid and roads and support infrastructure.

              The reason they were not used in any respectable numbers prior to the last fifteen years is that they were not viable. It’s as simple as that…and they are still not viable without subsidies, they simply are extensions of the FF fuel world we have built. They are extenders, they are extending the burn so we can burn as much as possible before the system collapses. Germany and Spain know this, their experiment has failed to the tune of tens of billions of dollars.

              How anyone but the paid shills can’t understand this is beyond comprehension.
              Your grandparents lived through a time of innovation and advancement supported by cheap plentiful fossil fuels, there would have been no “transition” without FF’s and we would not have grown the population of the world to nearly 7.3 billion. How come everyone thinks we can “transition” down to BAU lite. Like it will just happen nicely and folks will drive electric cars powered by a solar, windmill supplied grid.

              So we peddle out the example of Joe down the road who runs around in a golf cart. Holeee cow. There will be innovation on a miniscule scale, humans are resourceful but you will find every single one of the “innovations” rely totally on fossil fuel infrastructure. They need plastics and glass and roads and chainsaws, supermarkets and government and communications it goes on and on. There are no true “off gridders” they need the FF world including the “renewables” they use that allow them to claim they are off grid.

              My guess is NOT a LOT of industry will be maintained. Simply because of the big picture. Jobs are required (BAU) to support people, to enable them to create demand and support the government and services like hospitals, law and order, highways, bridges, banks and even the damn stock market. That is what the oil age has built and what, in no way shape or form can be supported by anything else.

              • Paulo says:


                Your points are well taken and quite correct as far as I am concerned. However, I wouldn’t characterize all renewables as ‘parasitic’. Sometimes they are implemented as such, (like where I live in BC). That is true. However, many renewable developers are truly trying to to ‘good’ and are well intentioned.

                As ff availability winds down those ‘individuals’ who had the foresight to buy some panels and live in a place where the sun shines will do pretty good until they break. The rest of us will go to bed early, I guess.

                I live on a river on the BC coast. The sun doesn’t shine enough for PV. The river is tidal influened and is not suitable for even slow turning blades most of the year. The wind? Big summer westerlies but they just don’t blow the outlay vrs payback numbers away.

                I’ll just go to bed early.

                regards Paulo

              • John B says:

                Well since you know everything, when exactly is this “collapse” going to take place?

                • TechGuy says:

                  John B Wrote:
                  “Well since you know everything, when exactly is this “collapse” going to take place?”

                  When you least expect it and well before your ready for it.

                  Nick G Wrote:
                  “First, let’s clarify: the industrialized world was not built with cheap fossil fuels: it was built with fairly expensive fossil fuels. They were well worth it, but they weren’t cheap until after WWII.”

                  No they were dirty cheap compared to wood and manual labor that was used before Fossil fuels became accessible.

              • Nick G says:

                Wow. There’s nothing in that that’s realistic. Nuthin.

                First, let’s clarify: the industrialized world was not built with cheap fossil fuels: it was built with fairly expensive fossil fuels. They were well worth it, but they weren’t cheap until after WWII. Oil and electricity have been cheap in the US in the post-WWII period, but energy was rather higher in years before that: coal and electricity cost much more, adjusted for inflation. The US, and other countries, succeeded quite well in growing strongly even when energy was much more expensive, whether it was coal or oil.

                Wind power is quite affordable (if perhaps not quite as dirt cheap as US post-WWII oil and electricity prices), scalable, high-E-ROI, etc, etc. So are nuclear, and solar even if they aren’t quite as cheap at the moment (coal is also plentiful and cheap, unfortunately), so I see no reason to expect energy to ever be more than “moderately expensive”.

                The fact that energy pre-WWII was a much higher portion of GDP means that it was a much heavier burden on the economy. Even if wind and solar were a little more expensive, that means that the wind/solar sector would have to be a little larger than otherwise to power the rest of the economy. This analysis suggests that this is not a big deal: that sector would still be a much smaller portion of the economy than pre-WWII..

                Second, fossil fuels aren’t nearly as cheap as they seem. Pollution is an unrecognized, external cost. So are the military costs we’re seeing currently of roughly $500B per year. Those pollution costs aren’t sustainable (especially CO2), but unfortunately the military costs probably are (in fact, many corporate interests are quite comfortable with them…). Moving away from oil and other fossil fuels will actually be much cheaper in the long-run than BAU.

                Finally, let’s assume that Business As Usual involved spending about 5% of our economic activity (perhaps measured by GDP) acquiring energy. If the cost of acquiring energy doubles, then we have to dedicate another 5% to that activity. GDP might go down by 5% quickly, in case we’d have a deep recession. Or, it might happen over time – if it took 10 years, then we’d see a reduction in economic growth of .5% per year, for 10 years. After that transition was complete, economic growth would continue. So, a reduction in “net energy” has a significant impact, but it’s not TEOTWAWKI.

                Does unusually strong growth since 1945 show the value of cheap energy in that period?

                No, US growth was faster before 1945, using moderately expensive, non-oil energy:

                1800-1900: 4.13%

                1900-1945: 3.53%

                1945-2000: 3.17%

                “real GDP” at

                The 19th century economy was starting from a smaller base, but it’s tough to argue that the new kid on the block, oil, “goosed” the economy.

                Oil is a bit more convenient – for instance, Churchill converted the British navy from coal to oil because they could “steam” just a little faster than the competition – but civilization would have been just fine without it. Rail would have kept it’s central role for freight and passenger traffic, cars and planes would have been less numerous and shorter range, and used batteries and ethanol, etc.

              • oldfarmermac says:

                I was a baby once and I would not be here had my parents not created me and subsidized my existence to until I was a physical adult.

                Technologies come and go in generations of technologies just as generations of people go- as species themselves come and go to be succeeded by new species.

                It is true that renewables for now must depend on the fossil fuel industries to support them but it is false reasoning to assume that this must always be so.

                The ratio of energy returned on the energy invested in building wind and solar farms is already favorable and will get better as time passes.

                AT ONE TIME I BELIEVED MYSELF that a transition to a renewables based economy and society was a physical impossibility. At one time I believed Paul Elrich was right when he wrote in the Population Bomb that most of the human species would have died of disease and famine by now.

                I am well educated technically – with a degree from a respectable university very heavy in the sciences, enough math , etc to have an opinion.

                Beyond that I have spent many a long evening for decades reading good books about history and politics and in particular about war and politics and what people do – and what nations do- in times of extreme stress and danger.

                Anything that is physically possible can under the right circumstances become a political possibility- and if the physics and geology and geography are favorable such a possibility can become economically feasible and a reality.

                I have laid my case out here several times concerning what modern nations are capable of when existentially threatened . The last time for us was WWII when the threat was immediate and impossible to ignore.

                In a matter of months we quit building cars and got very busy building warships and planes and guns and training men to charge into the guns of other men shooting at them. They did it.

                Now if the roads that were built with fossil fuels were going to DISAPPEAR when fossil fuels are no longer available cheap and in quantity that would be a problem. But those roads are not going to disappear. If we quit building cars and pickups and big trucks for ten years nobody will starve or die as a result.

                OIL IS NOT GOING TO DISAPPEAR OVERNIGHT. COAL is plentiful enough to last another century at least and coal to liquids is a well proven if expensive technology. Happy motoring American style will disappear with cheap oil but industrial civilization will not.

                Natural gas and coal to liquids will keep ESSENTIAL machinery moving. Over a ten to twenty year period as energy grows ever more expensive new housing will be build in quantity not in the suburbs but high rise fashion on existing roads served by buses and street cars with most service jobs located within walking or biking distance of this new housing.

                A typical old house such as the one I live in can be refurbished to near zero net energy status for the price of one or two ordinary cars- today. In ten or twenty years the cost of doing so will be cut in half because the process will be scaled up and streamlined.

                The population seems to be headed for a peak and for what it is worth my guess is that it will peak sooner than almost anybody thinks it will. Young people are already growing few in number compared to old farts like me.

                A generation of people with two kids is leaving behind a world with housing built well enough to last a century if maintained – even the cheapest tract houses built in the mid fifties are still in great condition if they have been well maintained. I used to live in one and owned a couple more and worked on lots of them and I know whereof I speak.

                Our kids instead of having to deal with a thirty year mortgage to buy are only going to have to deal with buying windows and siding and roofing and a new heating system on a piecemeal basis.

                I am a realist who was once a confirmed doomer. I have come to realize that while industrial civilization may crash and burn that it is not DOOMED to crash and burn.

                The odds are actually pretty high that countries such as the US will pull thru the bottleneck more or less whole. We still have plenty of everything we MUST have to get along ok without importing a goddamned thing.

                Of course somebody may bomb us back to the stone age or turn loose an engineered disease that will get us all but the odds are in our favor that these things WILL NOT happen.

                Hardly anybody is going to be dumb enough to bomb us the ONLY way that REALLY matters – with a nuke- and creating a killer easily transmissible disease is a tough job.

                If such a disease does break out it can probably be controlled with a draconian quarantine if by no other means. And sky daddy alone will be the only hope of the country of origin if the ever more sophisticated intelligence industry can determine who turned THAT dog loose.

                Now as to what life will be like in a century- or two centuries I can only hazard a wild ass guess. It will be pretty rough if a series of wars destroys the industrial base beyond any hope of rebuilding it without abundant and cheap fossil fuels.That could happen.

                It could be pretty good if some countries pull together and pool resources and build out a renewables industry and keep the population under control and go all out for conservation and efficiency.

                My guess for what it is worth is that some parts of the world will be nice pleasant places to live with just enough people to keep from feeling lonely and that other parts will be barren moonscapes and that other parts yet will be hand to mouth subsistence hell holes such as India was a century ago.Most of India a century from now will probably be a moonscape due to runaway warming and a good bit of the rest will probably be a hellhole.

                The northern portions of the US at moderate to higher elevations will probably be ok to nice places occupied with happy campers- not too many though since women once they have gotten control of their lives and reproductive destiny are not going to give that control up.

                Beyond that the ancient social contract between parents and child with the child looking after the elderly parent is broken – and probably so badly broken as to be beyond repair. I can hardly imagine more than one out of ten youngsters these days giving any thought to looking after their parents. These youngsters have already seen their own parents put their seldom seen old folks in nursing homes.

                Nobody who has put his own mom and dad in a nursing home should be so naive as to believe that his own kids are going to look after him. There is little reason to have a large family from here on out. Todays and tomorrows jobs are not the sort that kids can do.Tomorrow’s kids are not going to be helping out on farms.Not very many of them anyway.

                It never occurred to me when I was young and still ignorant- even as I clutched my just awarded college diploma -that Mexican and Brazilian women would have only one or two kids these days – but that is the new reality.

                It never occurred to me that our own underclass would quit having babies one after another. But I know only ONE woman these days who is supporting a house full of kids on welfare.Even the younger so called welfare queens generally shut down the baby factory after the second kid or the third one at the latest these days.

                My own grandparents had large families and there were five of us that lived at my house. But I have no children and my four siblings had only seven between them.Five men and women need five other men and women to raise conventional families ya see. At this rate there will be damned few young farmers around to inherit this old farmers place in two more generations.

                We are still at least nominal Bible thumping Baptists who supposedly do not believe in evolution or geological time or even a round earth in case anybody thinks our religion is relevant to the points I am making..

                Anybody who thinks Catholics pay any attention to the Pope these days should take a few minutes to check out birth rates in Catholic countries.

                I have been in a dozen backwoods fundamentalist churches in the last couple of years for funerals and weddings and various family homecomings and other social functions and I cannot remember seeing a single woman with more than three young kids in tow although there must have been a couple at least with more than three. One or two is the norm even among the Bible thumpers these days – the Duggars be damned is the unvarnished opinion of just about every woman I have ever spoke to- including women who ordinarily wound not say a four letter word for a thousand bucks.

                It never occurred to me that solar power would actually be very close to dollars and cents cost competitive with oil and coal during my life time. But this is reality today.

                It never occurred to me that poor Africans would have cell phones during my life time- two way radios were pretty expensive back in those days.

                It never occurred to me that poor countries would skip the central power station and grid phase of electrification and go directly to solar power and batteries but this is reality too.

                Ya need to know some history and experience being wrong a few times about deeply held beliefs and be man enough to admit to yourself at least that you have been e wrong occasionally before you go around telling people what is possible and what is not.

                Physicists know some stuff. Engineers know some stuff. Biologists know some stuff. Economists know some stuff.
                Even old farmers know a few things.

                One thing the old farmer knows is that nobody has a lock on the truth the whole truth and nothing but the truth.

                I believed my biology professors back at Tech to a far greater extent than I believed my econ instructors. I still believe the biology guys own a bigger piece of the truth than the econ guys.

                BUT so far the econ guys are still ahead on the scoreboard.

                We have a shot at achieving a renewables based sustainable industrial society. Making it happen is not by any means a sure thing but neither is it a lost cause.

                Right now I am reading Ed Cray’s ” General of the Army ” biography of George C. Marshall.I am by no means a worshiper of military mores and values but such books bring you to a realization of what is POSSIBLE when a large and powerful country realizes it is threatened and takes off the gloves and gets down to bare knuckled eye gouging crotch kicking live or die BUSINESS.

                We can have a renewables based industrial civilization if we want one. The only people who believe it can’t happen are those using economists arguments against it – ”not enough resources,not enough ingenuity, not enough will power” so it won’t happen.

                The Pyramids got built with primitive hand tools. The Roman Empire was built with nothing more sophisticated than swords and shields.

                The cathedrals of the world were built on the basis of nothing more than idealism with hand tools mostly by illiterate men who knew hardly anything at all.

                This is ultimately ironic in the extreme because classical economists believe in infinite resources, infinite ingenuity, and invincible will in the capitalist drive for profits.

                There is plenty of iron ore and bauxite and sand and coal in this world to build enough solar panels to generate ten times more electricity than we use these days.

                Iron and aluminum and copper need never be mined but once. The three key metals are just about infinitely recyclable. There is enough steel in automobiles in this country alone to build many times more solar farms than we need to give up burning coal for electricity. It would be nice to make the frames for the panels out of lighter and more corrosion resistant aluminum of course but there IS such a thing as paint.

                People who think that mining cannot be accomplished without diesel fuel seem to forget that iron ships and railroads and bridges and tools and weapons were commonplace before the internal combustion engine was commercialized.

                All that is needed for us to get started on the road to a sustainable world is for reality to smack us upside our collective head with a series of Pearl Harbor wake up bricks often enough and hard enough to get us started on the job.

                I think there is a good possibility we are going to start getting hit with these wake up bricks often enough and hard enough to EVENTUALLY convince us that a wartime effort is our only hope of continuation of LIFE AS WE KNOW IT.

                The bricks are already coming but not yet often enough to matter – and the source of them is still a matter of uncertainty to the average man on the street.

                But when the Oglalla runs so low it takes more diesel to pump it than corn is worth- and the big center pivots stop pivoting – that sort of brick comes from a place that cannot be questioned. When the last of the reachable coal is dug near my home – which the industry expects to happen within twenty years- that difficulty is not going to be mistaken for the result of a random variation in the weather.

                When it gets hot enough that people simply have to give up living in the lowlands in Central America and maybe in the deep south right here in the US nobody is going to be able to blame that on a random variation in the weather.

                And when the sea level rises a foot or so and floods a shit load of rich peoples low lying water front property nobody is going to be able to blame that on a random variation in the weather either.

                When some country mobilizes its armed forces and invades a neighbor for possession of farm land and minerals because the land at home is exhausted or covered over with houses and the domestic mineral supply is all used up – nobody is going to able to blame this new war on a random variation of the weather.

                • SW says:

                  I work on renewables but to steal a phrase, I believe in an “all of the above” energy policy. I don’t know how you can look at the absolutely staggering requirements of the future and the limits of our natural resources and come to any other conclusion.

                  We should, in my view, take as thorough and careful an inventory of our resources as possible and then husband them for maximum effect so that when you integrate their use over time we get the most utility out of them possible.

                  This is where I part company with some of the industry cheerleading when it comes to fossil fuels. Especially natural gas. If we had a truly best use policy I think it would be pretty clear that natural gas is our premiere heating fuel in cold climates. The low emission, convenience etc make it awfully hard to beat.

                  I hear the industry talk about fracking giving us the potential for 50 years worth of natural gas. Imagine that! 50 years. Well, I don’t know about you, but 50 years doesn’t seem like such a long time to me. It has been 51 years since Jack Kennedy was murdered. Doesn’t seem like such a long time ago to me. Are we really OK with the idea of burning through our premier heating fuel in that short of a time interval? Without really thinking about what is going to take its place? Blue Coal? It just doesn’t sound very attractive to me.

                  It is the short term thinking that bothers me. We are a great nation. Great nations plan for the future. Not just our lifetime, but our children’s lifetimes and their children’s lifetimes. Fossil fuels are the highest density energy source on the planet. Is our generation really OK with the idea of burning through the bulk of it leaving the dregs for all who are to come after us because we can’t muster the political will to add some diversity to our energy mix? Probably.

                  • Nick G says:

                    I think there was a major German study recently, that concluded that a lowest-cost grid would be about 80% renewable, 20% actual gas.

                    Re: heating, had any experience with air-based heat pumps?

                  • oldfarmermac says:

                    ”We should, in my view, take as thorough and careful an inventory of our resources as possible and then husband them for maximum effect so that when you integrate their use over time we get the most utility out of them possible.”

                    SW is dead center in the ten ring – a perfect bullseye.

                    But the only way the monkeys will all work together is that reality smacks us monkeys upside the head with a sufficient number of sufficiently injurious Pearl Harbor events. If that happens we will all pee in our drawers and beg the government to save us.

                    At that time we will get what we asked for- an authoritarian government that will get to work on the problem on a war time footing basis.

                    If we are lucky we will have leadership at that time that is reasonably competent and the odds are not bad that we will pull thru more or less whole….. some of us at least.

                    It is often said that God fights on the side with the biggest artillery. In this case the artillery will exist in the form of engineering expertise and skilled workers.

                    I hope we have enough of both left after exporting half or more of our industrial base to our competitors. It’s a Darwinian world. It always has been. It always will be.

                    We haven’t had much in the way of inspiring leadership since I was a kid.

                • Anonymous says:

                  “Young people are already growing few in number compared to old farts like me.”
                  Not globally, Mac:

        • Those energy storage projects are not practical. They are implemented in California because the legislature demands it. The cost is passed on to customers, therefore the power companies are merely putting in place a system demanded by politicians, who in turn try to please their constituents. When the public sees the higher electricity bills they can decide if it’s worth it. But I sense right now the politicians are fairly ignorant and poorly educated, California has a large population of ignorant voters, and they will likely ruin the state economy.

      • Nick G says:

        First, I don’t actually see anything that says this amount of wind turbine construction can’t be done. It simply seems to say: “wow, these numbers look awfully big! how can we do that”? That can be described as a “hand waving” argument.

        2nd, I see energy inputs converted into oil with what looks like a simple BTU: barrel conversion. Just because concrete requires BTU inputs doesn’t mean that it requires oil.

        • What do we do when the wind stops blowing?

          • Dennis Coyne says:

            Hi Fernando,

            You can overbuild wind over a wide area and there will be very few hours where there is not enough power. During those times, less can be used using time of use pricing and there can be some backup from batteries, fuel cells, electric vehicle batteries, and natural gas.

            • Dennis, I don’t know who is “we”. Renewables penetration is limited to at best 30 % of total electricity demand, and that’s at enormous cost and lack of system reliability. I suppose one could use a smart meter system to cut off customers on the fly, but from a technical standpoint we lack the ability to keep a grid stable unless there’s a significant amount of gas turbines ready to back up the whole mess. I base my comment on studies I read. Germany’s wind and solar power projects are a big failure, that’s real life.

              • SW says:

                Your comments about Germany are filtered through sources with agendas and are incorrect. It is a work in progress. It is so early in the game that to call it a failure now reveals your bias.

              • Dennis Coyne says:

                Hi Fernando,

                Try the following study,


                The study sheds light on what an electric system might look like with heavy reliance on renewable energy sources. Wind speeds and sun exposure vary with weather and seasons, requiring ways to improve reliability. In this study, reliability was achieved by: expanding the geographic area of renewable generation, using diverse sources, employing storage systems, and for the last few percent of the time, burning fossil fuels as a backup.

                Paper can be found at link below:


                Link for paper in upper left of that webpage.

                We find that the least cost solutions yield seemingly-excessive generation capacity—at times, almost three times the electricity needed to meet electrical load. This is because diverse renewable generation and the excess capacity together meet electric load with less storage, lowering total system cost. At 2030 technology costs and with excess electricity displacing natural gas, we find that the electric system can be powered 90%–99.9% of hours entirely on renewable electricity, at costs comparable to today’s—but only if we optimize the mix of generation and storage technologies.

                Also, with time of use metering, the meter shows the customer what the current price of electricity is and the customer chooses whether to turn down (in winter) the thermostat. If prices rise to $1/kw-hr when the sun doesn’t shine or the wind doesn’t blow and backup sources are running low, a lot of middle class people will decide they would rather where long underwear and throw a blanket over them in winter, or wear less clothes and run a fan in the summer. Certain non critical industrial processes could be shut down when electricity prices rose. In an emergency shortage where grid stability was threatened, customers might be shut off. Generally this would be commercial and industrial customers rather than residential.

                • Nick G says:

                  The classic example of Demand Side Management (DSM, aka Demand Response) is EV charging. EVs are smart enough to optimize when they charge – they’ll charge at the cheapest time, and the owner will never notice.

                  DSM is old and proven. Many customers are happy to save money by optimizing when they use power.

                • Sam Taylor says:

                  I must admit I find that survey far from promising. Here in the uk national grid have said ( I can’t find the reference right now) that they can’t balance anything more than about 30% wind penetration. Anything more and stability is a real issue. Storage technology is nowhere near being where we need it to be. So quite how we’re supposed to get from 30% to 200% without the grid collapsing I don’t know. We would have to keep building more fossil generation to back up the intermittent sources, but then why not just use the fossil generation? The technology simply isn’t fit for purpose yet, which is a real problem.

                  My other issue is that they assume prices in 2030 are going way down. Well, if oil continues its long term increase, the inputs themselves will only get costlier.

                  Eroi is never even touched on, and I’m yet to see a renewables plus storage eroi that inspires confidence.

                  • Nick G says:


                    Find the survey that says 30% is a limit, and we can review the assumptions. I suspect one of the assumptions a continuation of the current requirement that the grid accept 100% of wind output. That’s something that will obviously have to change to increase wind’s share of grid kWhs.

                    As for FF backup: it’s helpful to make a distinction between energy (kWhs) and power (kWs) in general, and between energy market share and peak capacity in particular. The US (and, I assume, the UK) grid already has enough FF capacity to cover peaks, so if wind power is expanded (and we made the false assumption that wind provided nothing towards peak capacity) there would be no need for more FF peak capacity in the short term.

                    Now, why expand renewables? Well, first, do you accept that climate change is a big problem?

                  • Dennis Coyne says:

                    Hi Sam,

                    The U Delaware study uses very conservative assumptions about 2030 renewables costs, remember that fossil fuels will be considerably more expensive by 2030. The grid stability issue is a non-issue, my guess is that entrenched fossil fuel interests are behind the 30% limit meme.

                    As Nick says, the requirement that the grid must accept all power generated by wind will be relaxed. With modern weather forecasting the power generation by wind power can be forecast pretty well 24 hours ahead. With a combination of demand side management and natural gas, nuclear, battery, fuel cell, and vehicle to grid backup, and excess wind and solar capacity, the system is very workable.

                  • Dennis Coyne says:

                    Hi Sam,

                    Do you have a link to the study suggesting a 30% limit on renewables?

                  • Nick G says:

                    Here’s an article forecasting improvements that clarifies that 30% is not a barrier:

                    “forecasts are helping power companies deal with one of the biggest challenges of wind power: its intermittency. Using small amounts of wind power is no problem for utilities. They are accustomed to dealing with variability—after all, demand for electricity changes from season to season, even from minute to minute. However, a utility that wants to use a lot of wind power needs backup power to protect against a sudden loss of wind. These backup plants, which typically burn fossil fuels, are expensive and dirty. But with more accurate forecasts, utilities can cut the amount of power that needs to be held in reserve, minimizing their role.

                    Before the forecasts were developed, Xcel Energy, which supplies much of Colorado’s power, ran ads opposing a proposal that it use renewable sources for a modest 10 percent of its power. It mailed flyers to its customers claiming that such a mandate would increase electricity costs by as much as $1.5 billion over 20 years.

                    But thanks in large part to the improved forecasts, Xcel, one of the country’s largest utilities, has made an about-face.

                    It has installed more wind power than any other U.S. utility and supports a mandate for utilities to get 30 percent of their energy from renewable sources, saying it can easily handle much more than that.

                    ..forecasts from NCAR are already having a big effect. Last year, on a windy weekend when power demand was low, Xcel set a record: during one hour, 60 percent of its electricity for Colorado was coming from the wind. “That kind of wind penetration would have given dispatchers a heart attack a few years ago,” says Drake Bartlett, who heads renewable-energy integration for Xcel. Back then, he notes, they wouldn’t have known whether they might suddenly lose all that power. “Now we’re taking it in stride,” he says. “And that record is going to fall.””


                  • Sam Taylor says:

                    Sorry guys I misremembered some numbers, it turns out. Strike that 30% claim from the record. It was 30gw solar, and a maximum of 60% before things went wrong. Note is here:


                  • Nick G says:

                    That makes more sense.

                    I think it’s fairly clear to everyone that there are certain ranges where certain sources are optimal. Above very roughly 50% for wind, and 30% for solar, incremental additions are going to be less valuable.

                    You can make amounts above that work if you have to, but a diversity of supply power sources is the cost optimal solution.

                  • Nick G says:

                    Some more thoughts. I had a chance to look at the UK document, and we see:

                    the 60% limit is an assumption derived from a study of Ireland, which is a relatively very small grid.

                    The document assumes that there is no ability to curtail solar output.

                    It also clearly doesn’t include any demand side management, which is highly effective and very cost-effective.

                  • Nick G says:

                    Very important category of demand-side management, in a post fossil fuel grid, will be electric vehicles.

                    EV’s are likely to account for about 20% of grid demand. That’s 20% of demand that can be pretty much turned off at will just by raising prices a little, or can be doubled or tripled by lowering prices. It gives grid operators enormous power to match supply and demand quickly and as needed. , It’s essentially free to the grid operator.

                    DSM is dramatically more operationally and cost wise effective, then building back up power.

                  • Sam Taylor says:

                    Also, nick, while we currently do have plenty of FF backup (not all of it is gas to offset the wind, though) lots of those plants are scheduled to close either because of current emissions directives, or because the current market structure makes it unprofitable to run gas plants largely as backup. One plant earmarked to close is 10 years old and 70% efficient. Rank stupidity over here.

                  • Nick G says:

                    Some thoughts:

                    Are you familiar with the statistical analysis used to assess the reliability of power sources? You’ll be surprised, I think. It turns out that fossil fuel sources are less reliable then you might think, and wind is more. Wind has more variance, certainly, but it does provide some firm peak capacity.

                    In most of the U.S., plants are paid for their firm peak capacity, as calculated by the Independent System Operator. Europe hasn’t figured this out yet, but it’s being considered. This allows the grid to maintain backup capacity where needed.

                    70% efficiency sounds high, unless there’s cogeneration.

                  • Sam Taylor says:

                    It’s a combined heat and thermal plant. 70% is the figure given:


                    I am familiar with the numbers. Nuclear hovers around 90% nameplate, coal 70%, gas 50% though that’s load following. Wind in the uk is around 30%.

                    Finally the study uses Ireland because their grid is closely analogous to that of the uk. High wind penetration and limited interconnector availability. The study is by national grid whose raison d’etre is grid stability within the UK. Ireland are also running their ccgt fleet ragged, and very inefficiently, constantly turning them on and off to balance the wind, which will start causing them serious problems in the next few years, and given the idiotic decisions being made in Westminster by decc we’re likely to follow.

                  • Nick G says:

                    1) that’s capacity factor, not efficiency. The very best thermal electric generating plants reach maybe 55% efficiency.

                    2) size matters. For example, Ireland has ruled out nuclear power, because the loss of a single gigawatt powerplant would destabilize their grid.

                    The law of large numbers means the larger the grid, the more variance it can deal with. Or to put it another way, every time the grid doubles in size the ratio of variance to mean output drops by 30%.

                  • Sam Taylor says:

                    Yes, capacity factor, because you said ‘reliability’, which is what capacity factor means. Now, read the article, you’ll see that it’s 70% thermally efficient.

                    The study has nothing to do with the law of large numbers, which is a theorem of statistics entirely unrelated to this discussion. Besides, uk wind output is highly correlated across the country anyway. In effect it acts as a single massive power station, which would have exactly the destabilising effect the Irish were trying to avoid. I think I trust an analysis by the people tasked with running our grid over your opinion and some hand wavey use of statistics buzzwords.

                  • Dennis Coyne says:

                    Hi Sam,

                    Thanks. Eventually natural gas will deplete, so it would make sense to start to limit natural gas to a backup role, nuclear is fine, that is the choice of UK citizens.

                    I would thing a grid tie with France and/or the Netherlands and Ireland would help to stabilize the amount of Wind down time.
                    Also my guess is that DECC did what is usually done and assumed we wanted to build exactly the amount of wind needed to meet peak load, if Wind is overbuilt so that peak output is up to 2 times the peak load, cost is actually minimized because there is less need for backup, which tends to be expensive.

                    With grid ties to a wider area, the excess output in one area can be moved to areas with a deficit so that the role of natural gas backup can be minimized.

                    I imagine you realize that fossil fuels will become more expensive as they deplete. Moving to other sources of energy such as wind, solar, and nuclear makes sense, unless one does not think that fossil fuel output will ever peak.

                  • Nick G says:

                    Ok, a few more thoughts:

                    Yes, overbuilding is a basic tool of grid management. The US grid’s total capacity is about 1,200GW, while average load is 440GW, so you see that overbuilding is a basic and normal thing.

                    There’s a difference between reliability and variance. Solar in the desert can be relied on to produce 100% at noon and zero at midnight – that’s reliability, even in the presence of high variance. Utilities value reliability, and can cope with variance.

                    Yeah, I see the 70% efficiency of that plant – I agree that it’s puzzling that if it’s in danger. I thought you were pursuing a train of thought with the capacity factor in the next sentence.

                    Capacity factor is reasonably closely related to variance, but isn’t identical: wind turbines are sized to capture maximum wind levels, but that doesn’t tell us that much about the percentage of time with zero output, for example.

                    Note again that the study assumes that solar (and perhaps wind) cannot be curtailed, and says explicitly that if it can that the 60% level is no longer a limit.

                    I think we’re trying to use this report in a way that was not intended: it’s not the source document for the 60% factor, and the precise level of that factor isn’t essential to it’s purpose – the important thing is that such a barrier exists. It appears to be a long range planning document meant to warn policy makers that wind and solar installations should include the communications and other tech needed for curtailment – after all, these are long lived investments.

                    Finally, 60% is pretty good – with nuclear and other things, you can reasonably reduce fossil fuel to 20% of the grid. What’s not to like??

              • John B says:

                Germany produced some 27% renewable power in the first quarter of 2014. I’d hardly call that a “big failure”. Some peak times were up to 75% renewable. Obviously, the grid can support more than 30% renewable.


              • StuckinWalkerWorld says:

                Fernando Leanme–
                Are you familiar with the State of Iowa? Windpower, as a percentage of total electric generation, accounts for about 30%, and with recent capacity additions, will breach the one-third mark in 2015.

            • TechGuy says:

              DC Wrote:
              “During those times, less can be used using time of use pricing and there can be some backup from batteries, fuel cells, electric vehicle batteries, and natural gas.”

              Tell that to the factory that need clean, reliable power to manufactured goods. A lost of power for just a few dozen milliseconds is sufficient to scrap $500K of parts in various stages of incompleteness and about 2 days to get the line operational again.

              Fuel Cells: Probably the most impractical electrical storage solution. Both Batteries and Fuel cells have limited lives. Batteries anodes corrode with use (or even in long term disuse). Fuel cells need to costly periodic rebuilds and need a source of free hydrogen to operate, as well as very expensive catalysts. Scientist and car companies have been working on Fuel cell cars for over 30 years. We are no closer to this than we are able to colonize the stars. Its not possible to sell a $250K car to the middle class.

              OK with NatGas, but its a finite resource and is need for a vast number other key processes such as domestic hotwater, heating, petrochemical production (plastics, fertializer, etc). In my opinion burning NatGas for electricity is a huge mistake. NatGas is the platinum of fossil fuels because of its extremely large number of uses.

              At best wind can grow to about 7% of grid production, after that the grid will become too unstable to manage and will trigger regional grid failures. Managing a collection of wind farms is like juggling, as the intermittent sources much be juggled to support near in-elastic loads. The only solution is to use Wind to power pumped storage systems (ie water reservoirs) to disconnect the intermittent sources into a near continuous steady output system. Excess power generated from wind can always be used to pump more water into the reservoir. The only issue is that these storage systems need lots and lots of water and be located in a location that provides ample height differential to run water turbines. It will be extremely difficult to implement sufficient pump storage systems due to water availability in many regions (ie the very dry US West), insufficient height potential for turbines (ie the mid west – flat lands) or the over developed East coast (with little undeveloped land – without destroying existing forests).

              Unfortunately Wind is a dead end. Much as Nuclear power was going to be “too cheap to meter” of the 1960s, Wind is no different.

              Fossil Fuels are solar power. Its a source of solar power that accumulated over ~400 million years. We consume about 400 years of stored solar energy every day in the form of fossil fuels. That very large amount of energy produced and consumed on a daily basis cannot be matched using renewable system no matter how advanced they become.

              • sunnnv says:

                “At best wind can grow to about 7% of grid production, …”

                Might read these facts about Germany.


                2013 wind provide 8.4% of total German electricity.
                PV 5.3%

                Daily max power was 24 GW for solar (slide 40),
                26 GW for wind (slide 41).
                German grid max power production from all sources around 80 GW. (slides 56+).

                24/80 is .3
                Last I checked 30% was a little bit greater than 7%.

                Or are you in the employ/allure of the fossil fueled generators, who have seen their profits decline because of competition from renewables?

                And where were the massive grid failures when Denmark wind met 135 % of demand for an hourly record,
                or 102% of demand for a daily record?
                Wind made 54.8% of Danish electricity demand for the whole of December 2013.

                54.8 / 7 is 7.82, your 7% figure is 8x wrong, basically an order of magnitude off.

              • StuckinWalkerWorld says:

                Your comments do not square with the reality of the State of Iowa. Wind penetration is 30% there. Iowa has plenty of factories, ethanol plants, even data centers. Google, a 24/7 operation if there ever was one, owns data centers and wind generating plants in Iowa. Iowa may be the gateway to flyover country, but that doesn’t mean it doesn’t exist!!!

              • Dennis Coyne says:

                Hi Techguy,

                With demand side management, the factory will decide if it is willing to pay higher prices. Not every manufacturing process is time critical. Residential and commercial demand will also be reduced by higher prices when electricity output is low relative to demand.

                An improved HVDC grid would aid in moving electric power from regions of high output to regions where output is too low. It can work to some degree, a lot depends on getting started on solutions to the problem.

          • Nick G says:

            Here are some thoughts:

            Variance isn’t the same thing as unpredictability/unreliability. Wind output can be predicted to a large degree, which allows planning, and reduces or eliminates a need for spinning reserves.

            As we add multiple windfarms, presumably with output either non-correlated or only partly correlated, the ratio of variance to mean output falls sharply. Also, many windfarms are negatively correlated, so that careful site selection reduces system variance.

            Geographic balancing between parts of the grid only requires transmitting balancing amounts, not the whole load. A cost optimized grid will not have world-girdling, massive transmission lines.

            Only a small % of a region’s wind power would need to be transferred between regions in order to provide balancing, and possibly not as far as one might think. Sometimes it’s just a matter of a number of sub-regions getting their power, on average, 100 miles from their west, rather than 100 miles from their east, and in effect you’ve transferred power from the western edge of the overall region to the eastern.

            We really don’t need much more peak capacity – perhaps none at all for many years, with good time-of-day pricing and DSM. That renders most of this argument moot, at least as a boundary: we can use existing generation if we have to as a backup.

            Wind farm peak capacity credits are a little like getting a dog to talk: the interesting thing isn’t how well the dog talks, but that it talks at all. The fact that even a small cluster of wind farms can have a 1/3 of average capacity credit, or wind at a regional level have an average 55% credit, is important.

            I see local wind capacity credit as solving roughly 40% of the diurnal intermittency problem; long-distance transmission solving about 30%, and DSM solving the rest. DSM alone could make an enormous contribution: think 220M EV’s (with 2.2TW peak demand or output) doing a dance of load balancing with the grid. This doesn’t even touch the legacy peak capacity which could provide backup – this we’d want to minimize to minimize CO2 emissions, but that wouldn’t be hard with DSM as a short-term factor: we’d only need it for very unusual, long-term lulls.

            Biomass would be enormously useful for grid stability. Biomass is an obvious, and workable, candidate for the job of providing backup for seasonal lulls in wind & solar production. OTOH, it’s not necessary.

            Solutions for seasonal lulls in renewable production include overbuilding; production of hydrogen, ammonia, methane or other synthetic hydrocarbons with surplus electricity; compressed air storage; pumped storage; nuclear; overbuilt geothermal; etc, etc, etc.

            There are a number of workable solutions to intermittency. Some are cheaper than others, some combinations are more optimal than others, but there are wide variety of ways to skin this cat.

            • That’s not what simulations show in Europe. The wind dies over extensive areas. And the grid just doesn’t stabilize. Right now here is Spain the government is making an effort to slow down renewables installations, and electricity is already very expensive. The Germans have been causing grid stability problems in nearby nations interconnected to the german grid, and their engineers can only find a viable solution: build coal burning plants, which happen to be lousy load followers. So a lot of the theory I hear about runs into a brick wall.

              • Nick G says:

                Do you have any sources or write ups for those perceptions?

                A few thoughts:

                Europe isn’t very big, so a “big area” may not mean the same thing to you.

                The German grid is statistically, more stable than ever.

                Both Germany and Spain invested a fair amount of money bringing down the cost of solar. Part of the cost that you see now, is the cost of success: the cost of solar plummeted, and installations soared, making the program more expensive than expected.

                Finally, I have the impression that the Spanish program was badly managed, and was the victim of bad installations.

          • oldfarmermac says:

            For the next fifty years or so we run on the remnants of the oil and coal and hydro and no doubt some nuke juice and maybe some wave power and some geothermal as well.

            By then we will have figured out how to get by ok on however much energy we can store on days when the wind does blow and the sky is not cloudy.

            We already know how to build HVDC power lines that can transmit huge amounts of electrical energy a thousand miles economically.

            As the build out of renewables progresses variability will be a smaller and more easily managed problem since the wind is always blowing somewhere and the sky is always clear somewhere.

            I have not been able to discover any evidence that any essential industry cannot be operated on an intermittent basis at least well enough to get by. Bread for instance keeps ok for at least a week. If we depend on wind and solar power to run bakeries we will need more bakery capacity but not much fossil fuel after that to bake bread.

            We are NOT going to just RUN OUT of any fossil fuel. We are going to run short of AFFORDABLE fossil fuel.If you cut your consumption by eighty or ninety percent then you can probably still afford the last ten or twenty percent.

            If the small amount needed for bakeries once in a while is not available then by god and by damn as one of my neighbors puts it then we can eat crackers for a few days. I have crackers that are ok that have been around for months. 😉

            • oldfarmermac says:

              Sometimes I get wound up like a spinning top or a hell fire and brimstone preacher and then go off to take care of a chore or something and come back and finish up and post answers to questions already better answered by others- Nick and Dennis in this case.

              Hats off to two other wide awake realists!!!

              • Shuffling Along says:

                I enjoy reading your posts, OFM.

                You are level-headed and articulate.


              • Dennis Coyne says:

                Hi OFM,

                Thanks. I find your perspective very realistic, Nick is on the optimistic side, I agree with him that much is possible, but he makes it sound as if it will be an easy transition, here (if I understand his position correctly) I disagree. We will need high prices and some level of suffering to get people to change their thinking.

                I wanted to offer a slightly different take on coal “available for centuries”. You did not say this, but you give the impression that you do not expect coal to peak for a long time. Work by David Rutledge of Caltech and Steve Mohr (PhD from U Newcastle, Australia) suggests that coal may peak much sooner than most people realize. This does not mean no coal will be available, but it does suggest that prices of all fossil fuels will rise when they peak (unless economic difficulties reduce demand). The higher prices for oil, coal, and natural gas will make wind, solar, and nuclear power much more viable. It would be good to get to work on nuclear research on pebble bed and other advanced reactor designs that would shut themselves down safely in the event of power loss.

                • Nick G says:


                  I think we agree that the problem is social, not technical.

                  So, is it the voters and consumers, or is it the leadership?

                  I vote for the leadership being the problem. Not the politicians: the wealthy, who make the campaign contributions, and shape the “marketplace of ideas” through their funding of “think tanks”, etc.

                  • Sam Taylor says:


                    It’s both social and technical. People want to drive Hummer’s, Chinese people want to consume like Americans. That’s how you signal status and get a mate. We elect the leaders who tell us we can have all this because we want it, not the other way around! There’s a reason al gore is widely reviled by a big chunk of the voting public.

                    The maximum power principle is going to win out, it’s what got us to where we are today.

            • wimbi says:

              This in support of all you said above.

              Here w have had about a month of pretty near nothing from our PV and so am floating along on a cloud of coal juice. Not what we want at all.

              So, back to the shop for the backup generator. Around here the logical fuel is wood. So, make a wood fired generator to keep the batteries full up even when no sun.

              My target is a thing any PV user would like so as to avoid ff’s as much as they can. And something any ordinary junk banger could do for themselves.

              I’m setting up a web site where anyone interested can go and find everything needed to do it themselves. So far m

              PSaking good progress and having lotsafun.

              The bottom line- with PV and a thermal machine CHP backup, any household could have electricity with hardly any draw on. ff’s.

              THIS IS NOT HARD TO DO.

              PS- the pyrolyzer loves plastics, old boots, yard sweepings and anything that will fit in and offgas something that will burn cleanly.

              • SW says:

                I’ve been working on Thermophotovoltaics for a long time. Still not really cost competitive but they will be eventually. A very elegant solution to turn infrared energy, (heat) directly into electricity the same way that conventional PV turns the solar insolation into electricity. Check out Lew Fraas’ Company JX Crystals.

          • SW says:

            If you live in SW Kansas you celebrate for a day.

        • Petro says:

          Memo to you Nik G:
          in 2014 the World is going to produce/consume ROUGHLY 500 quadrillion BTU(quite a few zeros there, aren’t they?!?).
          Roughly 170 quadrillion or ~35% are from oil; 155 or ~30% are from coal; 130 or ~25% are NG and ONLY 10% is everything else (including wind).
          Considering that most energy use for taking parts to site and assembling the turbine – which means (mostly) transport and heavy lifting rigs – which in turn consume mostly (if not entirely) oil……see where I’m going with this?
          Does that answer your “dilemma”? If not, allow me to be simpler and more direct for you to understand: Yes! Most of those BTU for concrete and wind turbine “building” do indeed come from oil.
          -Let’s not be experts and emit strong opinions in things we do NOT fully understand, shall we?

          Be well,


          • Nick G says:

            Well, no.

            The majority of the energy consumption for wind turbine steel and concrete does not come from the on-site installation process. And, finally,

            Wind has a net energy about 50:1.

            • Petro says:

              “Well, yes!”,
              but judging from what you write, it is evident that you do not have a clear understanding of what “net energy” really means!
              If you (think) do, it is indeed not the accurate version.
              Trying to help you on that department will be futile at best and, for you obviously think you do know, shall result in a series of emotionally charged comments which insult (intellectually speaking) this respectable forum… therefore I shall stop here!

              -All the numbers say otherwise, yet somehow you (and a few others here) think that we can take by magic wind from <1% of what it is today to replace coal, or oil, or NG and thus sustain our growth and prosperity as a civilization.

              You got it!

              Be well,


              • Doug Leighton says:

                Petro, you’re right, it’s pointless arguing with delusional. In fantasy land we might replace coal and oil and NG and thus sustain growth and prosperity but not on planet earth. Not with people running things, never.

                • oldfarmermac says:

                  Do you guys who say it can’t be done understand what is meant by a long term sustained wartime level effort? One that would be sustained long term in the same way that a country fighting an invasion by barbarians year after year would sustain a defensive effort AT ANY COST?

                  Maybe I AM delusional but I have read a hell of a lot of history and lived a lot of it myself in terms of SEEING it.

                  Now most people so far as I can tell simply do not grasp the awesome power of Leviathan – the modern nation state – once it has the bit in its teeth and is determined to pursue a certain course of action.

                  We can double our ACTUAL vehicle fleet average fuel economy in ten years or so if we simply CHOOSE to do so. All this would take is a law passed by congress to outlaw or VERY heavily tax vehicles that don’t get double what current gas hogs such as full size pickups get- and DAMNED few of these pickups are used these days, percentage wise, for anything except personal transportation.

                  Paying people to junk older cars and trucks would be necessary but given the complex nature of even early and mid nineties cars they are not easily repaired in the event of a major breakdown and are generally scrapped rather than repaired any way.

                  I have PERSONALLY installed hard foam insulation over the blocks of our old masonry farm house and vinyl siding over that and taken out the old leaky single glazed windows and put it double glazed – and if I had it to do again I would put in triple glazed. I put insulation underneath and more in the attic.

                  This cut our ac and heating energy expenditures in half. I could easily if absolutely necessary cut this cost in half again by bumping the thermostat four or five degrees in the right direction. Sixty eight in the winter instead of seventy two and seventy five in the summer instead of seventy.

                  People CAN and WILL double up when the cost of energy forces them to do so. I have invited an old friend to come live with me when Daddy dies. The deal will be that he pays half of all current expenses. This will just about HALVE my personal utility energy usage immediately .

                  If I can locate a somewhat attractive and intelligent woman interested in me PERSONALLY she can move in and stay for free. It’s a pretty big old house actually. Cut that per person utility energy usage by not quite THREE.

                  A lot of people who are regulars here fly all over the place on business and more beyond that for personal reasons.

                  We don’t NEED to fly hither and yon. There has NEVER been any REAL need to fly all over the place more or less continuously.

                  I live a good life and haven’t been on a plane in the last ten years.

                  People will stay home or travel by train maybe but air travel on the grand scale is toast in any case unless the aero engineers work some fuel economy miracles.

                  ( Given that cars can be downsized and can be driven at half the speeds we ordinarily drive them today we already know how to go five or six times as far on a gallon of petroleum. Just add a battery and an auxiliary electric motor.. Beyond that we will learn to hang onto jobs near home and move a hell of a lot of jobs into residential neighborhoods.

                  I don’t have video conferencing but my attorney does and I could easily conduct ninety nine percent of my business with him by video conference.The only reason I don’t have it is that I have not bothered to learn how to implement it. I already conduct ninety percent of my legal business by phone and email. )

                  After giving the argument than a sustainable renewable energy economy is impossible due consideration I conclude that the people who make it are correct- if they are argueing that an economy that looks like today’s economy is what they are thinking about – and they are thinking about making it happen on the scale they live their personal lives- a decade or two decade scale.

                  But the new renewables based economy -IF it comes to pass – is not going to be much like todays economy in terms of energy intensity and using things once and tossing them into the air or the nearest river or a landfill.The population is not going to look much like todays population by the time it is achieved- it will be much smaller and it will be better distributed to take advantage of low energy economic possibilities.

                  I am not argueing that we WILL ACHIEVE such an economy and I certainly do not expect to live to see it fully or even mostly realized personally.

                  I am argueing that the effort will probably be made on a wartime footing basis at some point and that enough renewables can be built and that enough efficiencies realized and enough conservation measures implemented that life MORE OR LESS as we know it can continue for a long time – centuries at least by making up the shortfalls of the renewables with the remaining oil and gas and coal reserves.Eighty or ninety percent renewables should be doable with in a half a century.

                  After that – who knows what might or might not be possible?

                  Bioengineers are just now scratching the surface of the possibilities involved with manufacturing biofuels.

                  I will not predict that it will happen but someday the sewage from a city such as Phoenix or LA may be piped out to the nearby desert and fed into a giant biofuel factory powered mainly by the desert sun that recovers most of the nitrates and phosphates and potassium for recycling while producing enough bio oils to run the plant and the pumps and the cop cars and ambulances and a few other essential ICE powered fast moving vehicles.

                  I presume you guys do know that under ground mining machinery is electrically operated these days ALREADY? That virtually ALL machinery used in factories is electrically operated?

                  It would not be all that hard to operate a giant power shovel in a strip mine using electric motors powered by wind energy. Such huge machines move only few feet on any given day. The Panama Canal was built with railroad tracks that could be shifted to follow the excavators as the cuts were widened – with a slight downhill slope maintained so the train could move up very easily indeed as each car was loaded passing by the excavator.

                  It is true that the wind might not blow any given day- but adding a more excavators and running them and the trains when it DOES blow would solve that problem.

                  That the best steels are mostly produced in electric furnaces?

                  That France has made extraordinary progress in electrifying her rail system and will be using oil only for lubricants in her rail industry in another decade?

                  That people who live a long way from jobs these days as likely as not live where they do because personal transportation has UNTIL NOW been dirt cheap?

                  I recently remarked to a cashier at a nearby restaurant that she seems to have found a home at her register- whereas there is a lot of turnover in the restaurant biz. She told me in no uncertain terms that having found a job within walking distance of her house she would NEVER give it up voluntarily. Other people are going to learn to adopt similar strategies.I didn’t ask but she probably does not own a car.

                  At one time there was a bus operating that came to within a mile of my house out in the boonies on a dirt road.(It has been paved long since.) It ran morning and evening and picked up anybody who had a job in the nearest town for a DIME round trip twenty five miles. You could commute for fifty cents a week. That one bus served the essential purpose of maybe as many as forty cars. I think maybe between renewables and conservation we could get by without TOO big a problem with shortages of steel.That bus actually ran at a modest profit since the guy who drove it owned it and worked himself during the day in the small industrial district where his customers worked too.

                  Such buses can be a reality again.All that is necessary are a few changes in the laws governing liability and for hire transportation to accommodate this change.

                  I don’t believe in farming moonshine to burn it in two hundred million cars but we could probably sustainably farm enough moonshine to fuel up a few million buses that run only a few times a day when they actually have substantial numbers of riders in them.

                  We may need to junk cars every ten or fifteen years because they are not really built to be easily repaired but a bus – well there is no reason at all that a bus cannot be refurbished and kept running more or less for a LIFETIME.

                  A big truck mechanic can remove the engine in a dump truck while an auto mechanic is still removing parts just so he can SEE the effing engine.

                  I exaggerate but not that badly. One bus fifty years – or fifty cars every ten to fifteen years? I think maybe renewables might be able to power up THAT much heavy manufacturing compared to todays business as usual.

                  Our big barn has a galvanized steel roof installed in the late fifties. We paint it every ten years or so and if rust peeks thru we get on it right away. I think maybe that roof is good for a full century at least and maybe two centuries.

                  I drink my cider or orange juice every morning from a snuff glass that my grandmother purchased – to get the snuff of course- back in the thirties and forties and fifties.

                  IF I don’t drop them these glasses will last a thousand years.EASY. Given that not many are left I do handle them like the heirlooms they are.I expect maybe renewables can generate enough energy to manufacture glass that will last a thousand years but maybe not enough to manufacture single use throwaway paper cups. 😉

                  Led lights can cut our energy consumption for lighting in HALF right now- and cut the packaging and shipping and retailing of light bulbs by EIGHTY PERCENT or more right now.

                  All it would take to make this happen is a law making it so.

                  Iron and copper and aluminum can basically be recycled almost indefinitely.

                  I have talked about terracing some hillsides on farms with other local professional farmers just to hear their reactions and they all think it is utterly foolish to even consider the idea- but there are entire mountainsides that have been terraced in some countries -BY HAND. It took a while it is true but the job got done.

                  My maternal grandfather cleared about fifteen acres of second growth hardwood forest BY HAND over a period of years with an axe and a mattock and a cross cut saw and managed to make a living out of that land in the process. It took a while but it HAPPENED.

                  Now my point is that I am convinced that you guys believe it can’t be done because you are looking at accomplishing the job as a task to be undertaken as a business proposition for profit and convenience.

                  I would argue that we don’t possess a fleet of nuclear aircraft carriers and submarines because it is profitable and convenient to have them but rather because NO MATTER THE COST we have collectively decided we MUST have them.

                  Now you tell me.

                  Do you guys believe it would be impossible to build let us say four times as many wind and solar farms annually as we are now for the next fifty years while also cutting our energy needs per capita by two thirds in that same fifty years ?

                  How much pv could we build if we quit spending just half of what we spend on beer, cosmetics, fast food, hot rod cars, oversized pickups and sky daddy alone knows what else that we CAN GET BY WITHOUT if we decide to do so?

                  I think maybe we could build ten times as much annually with no real problem other than just cutting out some other expenditures.

                  If I were in charge of feeding this country as the head of a dept of agriculture charged under emergency law to cut energy consumption in agriculture and given a free hand to do so I have little doubt I could manage the industry on half the energy it currently uses by just dropping our diet down the food pyramid a little way and utilizing some of the millions of people who will be out of work and living on welfare otherwise to economize on energy expenditures.

                  I could for instance put a couple of hundred thousand people to work just salvaging tree crowns to be used as firewood on a local basis. (Yes Charlotte Dear trees are a crop and foresters are farmers.)

                  Would that be as convenient and as cheap as burning natural gas TODAY ? Of course not but it would be a lot better than just supporting that two hundred thousand on welfare and living in cold houses.

                  We can and will quit wasting energy when it gets to be expensive enough that we must.

                  Lets consider just the energy needed to heat a house in moderately cold weather for instance and the possibilities involving a house sized combined heat and power unit- which will be economically feasible with no new technology at all as soon as energy gets to be more expensive.

                  Instead of a heat pump powered by coal or gas burnt at a big plant and distributed over a grid the gas will be burnt in a small totally automated ICE driving the compressor. The waste heat off the engine will not be waste heat anymore because it will be scavenged to heat the house and domestic hot water. Total energy efficiency can get to be pretty impressive with such a system- especially if that little ng engine is coupled to a small generator as well that supplies some juice to the house or back to the grid while also heating the house at times space heat is needed in only modest measure.

                  This does not seem to be all that big a deal to me.

                  The question in my mind is not whether it CAN be done but rather WILL it be done?

                  Renewables do not have to provide energy at the per capita rate we use it today – renewables need only provide enough energy to maintain a stable dignified and reasonably prosperous life.

                  Managing the transition may be extremely painful.

                  I expect it will be.

                  But we do NOT need to build another interstate high way system or another complete new network of pipelines or railroads or even a whole new electrical grid.We will have to build a lot of local extensions and upgrade and double track a lot of existing rail but on the other hand the people currently involved in building more roads can build railroads using the same skills and the same machinery.

                  We have reached a point whereby population growth is demonstrably going to level off and with a little luck reverse itself.

                  IF it does not level off and begin to fall due to the conscious choices of parents then it will fall off any way due to overshoot. Population IS going to go down for one reason or another.

                  If we were to close the borders of the US today we would basically be at a low enough birth rate per woman NOW to know we will be declining by the time the boomers are in the ground and the boomers are beginning to die off pretty fast already in terms of history.A decade is merely an eye blink in historical terms in many respects.

                  Maybe the reason I believe it can be done is that back when I was a kid I made a speech in front of three thousand people in Burruss Auditorium at Va Tech as a member of the FFA competing in the state public speaking contest. It was titled FOOD AND THE FUTURE.

                  I had already read plenty of dystopian literature by that time and the judges asked me if I thought farmers would be able to supply enough food to ten or twenty billion people during my lifetime.

                  I told them that as a farm kid and an ag major to be that I had NO DOUBT that we farmers could get the job done- given the necessary tools. But I said that I feared we would not get the job done for lack of roads, tractors , combines, pesticides , and all the other things industrial farmers routinely use. That was the perfect answer given that half of them were ag professors who had provided this exact answer to me previously when I asked THEIR opinion while on campus previously.

                  I would have won that contest had I not gotten a case of stage fright having never been in front of a large audience before and so stumbled in my delivery a couple of times. The judges told me that personally.

                  I was wrong about farmers not getting their inputs. We got the tractors and roads and combines and all the expendables and we have comfortably kept the world fed for the most part since the sixties..

                  So now I am understandably a bit more humble about predicting the future.

                  People tend to forget that during the thirties Germany under a mad man built up from scratch the most powerful war machine the world had ever seen until that time – starting with the German economy being in desperate shape.

                  Hardly any body except military historians knows that Russia – a country barely out of the middle ages in many respects at that time – managed to arm and field three times the troops the rest of the allies did.

                  It won’t be easy and it won’t be quick and it might not happen but a transition to a MOSTLY renewables based economy IS technically possible and imo could be managed within a half a century.

                  This transition COULD be accomplished before we run desperately short of fossil fuels which is not going to happen for several decades yet.

                  Now whether this transition can be completed one hundred percent is a question that must await an answer for a generation that may not yet even be a gleam in daddy’s teenaged eye..

                  If we consider fast breeder reactors as being renewable then there is no doubt industrial civilization can run without OTHER fossil fuels for centuries on end barring a nuclear WWIII and or too many catastrophic nuclear accidents.

                  We ought to be able to figure SOMETHING out in a few centuries.

                  IF not we can alway go back to subsistence farming on river deltas which certainly is sustainable on a millennium scaled basis and is probably sustainable indefinitely.

                  Knowing what we know now about public health and control of pests and diseases in agriculture we could have a pretty decent life using just basic metal working technologies and some biofuels for a few hundred million people living in the right places.

                  • SW says:

                    I have always felt that we are working on this stuff for posterity. For the future. I do feel very confident that the technologies that we have helped to create will be a very useful if not essential part of that future. I am proud of the fact that in this age of instant gratification we are at least doing something for the future that isn’t necessarily predicated on someone making a killing today. While I never really expected a ticker tape parade for the effort, the fact that it has turned into a partisan political issue and the contempt with which it is held in some quarters genuinely surprises me.

                  • Nick G says:

                    It’s to be expected – work on new technologies threatens people who make their living in the old technologies. They’re going to fight change, and it can get vicious.

              • Nick G says:

                Well, all the research says that wind’s EROEI is more than adequate:

                Here’s Cutler Cleveland’s summary of the literature:


                which showed that wind’s E-ROI was around 19. If you study his sources, you’ll see that that most of the studies are quite old. If you look at the turbines analyzed in those studies, you’ll see that they were much smaller than those in use today – look at Figure 2, and read the discussion. If you study that chart, you’ll see a very clear correlation between turbine size and E-ROI. Given the recent very large increase in turbine size, it’s perfectly clear that Vestas’ claim for a current E-ROI of around 50 is entirely credible.

                Again, an E-ROI of 19 is more than enough. There isn’t an important difference between an E-ROI of 20 and an E-ROI of 50. It’s like miles per gallon: we’re confused by the fact that we’re dividing output into input, when we should be doing the reverse, and thinking in terms of net energy. An E-ROI of 20 means a net energy of 95%, while an E-ROI of 50 means a net energy of 98%: there really isn’t a significant difference.

            • Caelan MacIntyre says:

              “Wind has a net energy about 50:1.” ~ Nick G

              Deja-vu (deja-loop)?


              “Here are two sources:
              Cutler Cleveland’s summary of the literature:
              which showed that wind’s E-ROI was around 19.” ~ Nick G


              “In 2006, according to the Danish Wind Energy Association, the EROEI of wind energy in North America and Europe is about 20:1” ~ Wikipedia

              Wind comes in at an EROI of 18

              The only other study you cited (cherry-pick?) was one of a lower 2.0MW and there may have been some other problems with it if recalled. You also did not elaborate on it, but just threw the link.

              • Caelan MacIntyre says:

                To clarify, you quoted, rather than elaborated, in your second link, however, and interestingly, your first link elaboration seems to contradict your second link with regard to the ‘size’, which is smaller:

                “If you look at the turbines analyzed in those studies, you’ll see that they were much smaller than those in use today… If you study that chart, you’ll see a very clear correlation between turbine size and E-ROI.” ~ Nick G

                2.0 MW for the second link’s apparently, but also, where is the EROEI on that one if you are claiming 50:1?

                • Nick G says:

                  Well, we seem to be having trouble communicating, so let’s break this down into smalls steps.

                  1st, do you agree that wind’s EROEI is around the 19:1 shown above?

              • Nick G says:

                1) have you looked at figure 3? Look at the size of the turbines used for this analysis – they are very small. As you begin to approach the size of turbines use these days (two to 5MW), you start to rise to 30 and above. Yes?

                2) look at the abstract: the authors say that the EROEI is favorable compared to fossil fuels.

                20 is more than enough.

          • oldfarmermac says:

            ”Most of those BTU for concrete and wind turbine “building” do indeed come from oil.”

            While this is true for the moment it does NOT follow that it must remain true. There is no good reason the energy used to build out wind and solar farms can’t come from coal for instance. There is no reason that once the build out is well under way an increasing share of the energy cannot come directly or indirectly from wind and solar farms.

            One thing is for damned sure. Wind and solar have the potential to be scaled up to just about any extent we are willing to pay for.. Fossil fuels being a finite one time thru gift of nature only have a LONG TERM future involving SCALING DOWN.

            IF we act wisely and use our one time gift of fossil fuel prudently to get the renewables industries up to WHATEVER SCALE we can manage then we will have that much energy available when the fossil fuels are gone.

            We sure as hell are not going to save the oil and coal and gas for a rainy day. We are going to piss it away in three ton trucks fetching beer and heating and cooling empty houses while the owners are flying to either the ski slopes or the beaches for the fun of it.

            Many a drunk who has tipped the strippers a hundred bucks is damned glad to find an unspent ten in his pocket the next day- enough for a greasy breakfast.Whatever we put into renewables even in the worst case is going to be like that overlooked ten- a godsend when it is needed after everything else is gone.

            Some people sneer at a golf cart converted into a car capable a reliable twenty mile range at fifteen to twenty mph. But my grandparents grew up having to take the family mule and wagon anyplace they couldn’t walk. And a twenty mile round trip was an expensive start early back late all day affair.

            I am back on the farm now. When I first went to the city I felt SMOTHERED having to either be inside my apartment or a friends apartment or in a bar or store or restaurant. I couldn’t live comfortably without my wide open spaces but I eventually got used to it.

            People will get used to living with less energy and short range electric vehicles. They will have to.

            And that gold cart sized car – factory built- that runs only when the sun has charged up the batteries for you – will still be a huge improvement over that mule drawn wagon my grandfather drove as a boy. Ya see the mule could only stand that twenty mile trip a day once in a while- just like a baseball pitcher can pitch only a few times a month.

            • Petro says:

              “…Wind and solar have the potential to be scaled up to just about any extent we are willing to pay for…”

              -That is the whole point, my dear Mac, is it not?
              Otherwise we would not be talking about peak oil, but run in shale, tar sand, Kashagan-like fields and deep water for as long as we can think of….but…(there’s always a “but”) we CANNOT pay for that, hence the term “Peak…”
              …yeah, we can talk about wind and tidal and solar and…….however, judging by how easy has been to obtain, wide availability, energy concentration, etc, etc, etc…and MOST importantly due to the fact that we as a civilization evolved, grew and built everything we know today as modern world around oil (and other fossils): from transportation, to food, to space exploration and technology (you name it!) – nothing will be able to replace it in the near (10-30-50 years) future.
              By then I suspect our world will look very different from today….not in the progressive sense…

              Yes: a turbine, or a hydro-central, or a PV farm here and there will be helpful, but as a civilization we have crossed the Rubicon in so many terms which do indeed include energy.
              Renewables are as renewable as the equipment used to harvest and ultimately use them!

              I do indeed respect your optimism and problem-solving sense, though!

              Be well,


              • Nick G says:

                Horses built coal mines.

                Coal built oil wells. Heck, horses moved the barrels – that’s where the Teamsters union came from.

                Wind is cheap, and solar is affordable and well on its way to being truly cheap.

                EVs are built in the same factories as ICEs – Google NUMMI and Tesla.

                • Ptero says:

                  …your Honor, I rest my case!


                  • Nick G says:

                    What case?

                    The first generations of renewables (wind, solare, etc) are built with fossil fuels, later generations will be built with renewable energy inputs.

                  • Petro says:

                    “What case?”

                    …the case that is a Pyrrhic Effort and utterly futile to continue the discourse with you…therefore I rest my case!!!

                    G’Night G.


                  • Nick G says:

                    Well, anytime you want to ask ask specific questions, or make objections based on quantitative evidence and real sources, please feel free.

  22. Regex Wald says:

    It is unclear, to me anyway, whether the lower production per well is because of downspacing, moving further away from the sweet spots, or both. But it is clearly happening. Newer wells, or at least those with higher permit numbers, are definitely coming in with lower production numbers.

    Bruce Oksol has three additional theories.

    It should be noted that there at least three new issues affecting production: a) new flaring rules; b) new conditioning rules; c) the plummet in oil prices. These issues are relatively new but oil companies have seen them coming (at least the first two) for several months now. I take [Ron’s] study with a grain of salt.

    • All the things Bruce mentions would affect production but none would affect “production per well”. I take Bruce’s theory with a grain of salt.

    • Watcher says:

      Pretty sure the salt in the production water has not been iodized, so don’t rely on it.

  23. canabuck says:

    Did anyone else have a problem with Figure 2 (not labeled) in the article?

    Figures 1 and 3 make sense, and we see First 24 hour range from: 100 to 3000
    But in Figure 2, the “First 24 hour” ranges from: 450 to 2000.
    I think something is wrong with Figure 2.

    • No Cainbuck, there is nothing wrong with it. In figure 1 the first 24hrs is the sort file. Therefore the numbers would start at zero. But the first 50 average would be above zero as they are, (68). In figure 2, the sort file is the second’s months production. That then becomes the figure that starts from the lowest number. In the first 50 wells, when sorted by first months barrels per day, there are a lot of high numbers thrown into the mix, not many but enough to make the starting point much higher.

  24. Ronald Walter says:

    If there were 3412 wells pumping oil in the Williston Basin in 2006 and the well count now is 11,500 and growing, those 8000 additional new wells since that time are all Bakken wells or wells with Bakken oil in the Three Forks and Lodgepole, pooled oil above the upper Bakken shale.

    The Bakken is what it is, nothing else. False hopes and dream turned nightmare for the oil industry. Have to buy beer to cry in. Think of Paul Newman in Sometimes a Great Notion.

    If the Bakken can’t cut the mustard, in the final analysis, it’s toast, cooked, the effort was worth a try, but it didn’t work out at all.

    More tragedy on the horizon, it is all the pits. Tons of money down a rat hole.

    No other way to look at it, just not enough oil to support the costs of doing the business of oil well manufacturing.

    Just didn’t work out as planned; it’s desperados waiting for a train, just like old Guy Clark sings in the song. It’s an oil related song about an old wildcatter bemoaning the fact that every well he drilled gone dry.

    All that can be done now is to produce the 1.15 million barrels of oil per day and hope for the best, the long run will produce the long haul, might as well milk them dry and move on, give up and forget about it. Nothing else to do now except to keep pumping the oil at 56.20 for each barrel, maybe more in the future, but you can’t hold your breath and stand on one foot.

    Such a shame it turned out like it did.

    Time to wallow in the misery.

    • Watcher says:

      Except . . . 50% of production is 9 months old wells. Every one of them cost $7-10 million of borrowed money.

      You can’t “just keep doing 1.15 million bpd” if you can’t drill and you can’t drill if no one will lend when they can see they won’t be repaid.

      The world of $55 is no drilling and hauling steadily declining output from present wells whose water output (that also has to be hauled) is growing.

      Zero drilling could lose 1.5 mbpd nationally over 14 months or so. In the Bakken, 500K bpd in a year. Then the next year down another 350K and presto, the growth narrative is sledgehammered.

  25. Longtimber says:

    Of Interest perhaps… Just stumbled across this .. Complete cycle of exaustion of Fossil Fuels.
    Health Facilities and the Energy Crisis: A Conversation with M. King Hubbert – 1976

    • John B says:

      It was very forward thinking of Hubbert to suggest that Solar Power was the solution back in 1976.

    • Caelan MacIntyre says:

      Viewed it, and thanks for sharing. Easy to understand.
      Ominous tone right at the end.

  26. Nick G says:

    . This was a very time consuming process since each well number had to be searched then copied and pasted into my Excel spreadsheet, one well at a time.

    Ron, this can be simplified. If you put your existing data in one Excel table, and the new data in another columnar table, you can copy a “vlookup” formula down a column that checks your new data to see if it’s in your existing data. If the new data element that you’re looking up doesn’t exist in the old data, you’ll just get an error message. Then you can use the Vlookup function to pull the data from the table of new data into the table of old data, in a new column.

    This will require conversion of PDF data into excel tables: you can use the Adobe Acrobat “copy as table” function, the Excel “data text to columns” function, and the text formulas to parse (chop up) the text if needed.

    • Strummer says:

      Or for some advanced excel wizardry, INDIRECT, INDEX and MATCH instead of VLOOKUP.

  27. Jeffrey J. Brown says:

    A somewhat surprising article in Fortune:

    Why the next world war will be fought over food

    • Watcher says:

      As has been noted, a proper military perspective of such things requires a departure from traditional military thinking to achieve goals. The goal of the military is to force the enemy to act as dictated/desired. Killing their military is just part of that process. The goal is not the destruction of their military. The goal is to dictate actions of their government.

      And so, the next war fought over food is a bit of a misnomer. In a world of scarcity, the last thing you want to do is restrict enemy consumption by lowering their population, so you don’t want to fight conventionally, i.e., focusing on killing their citizens, military or otherwise. Rather, you want to restrict their input of food and oil and force them to consume storage.

      Then, when storage is gone, they must surrender. Then you disarm them so they are helpless. Then you wipe them out, suffering no casualties of your own, to eliminate their consumption.

      • Ronald Walter says:

        Didn’t the Chinese army attempt encircle the US forces in North Korea?

        What happened? The army corps of engineers kept on with supplies up the Chosin River, the Frozen Chosin, and the US Marines were saved from starvation.

        120,000 Chinese army regulars against 15,000 US Marines and the Chinese merely thought they could encircle the Marines, but no, it was not to be.

        “We aren’t retreating, we are advancing to the rear,” said the commander of the US Marines.

        In the end, the Chinese army was cold, starving and in dire need of help.

  28. Pingback: Chronique : schiste, conspiration, vivrensemble | Blog de Yoananda

  29. Watcher says:

    End of Monday numbers unfolding as $55.xx, closer to 54 than 56. It did pop up to $58 last night in Europe, but the dollar immediately strengthened, including the Yen’s descent down to 120, from 118 last week. This took oil down $2+ and 55.xx is where things are. Still.

    • Watcher says:

      Gary Shilling, Mr. Deflation, has discovered oil.

      He’s making $20 noises. He also offers — the price to drill is not very important now. The price to get oil from wells already drilled is all that matters and the Saudis will win that ballgame. Which is why he can see $20.

      Not inclined to sneer. Jan 1, 2014 there were only about 15 zillion pundits announcing that booming US growth was going to take the 3% 10 Year Treasury note to 4.5%. Shilling was the only guy saying nope, 2%.

      Closing today at 2.16%. They’re lined up again to say the same thing for 2015, ESPECIALLY with “Fed liftoff”, raising rates. 4 or 5% is in the bag because it’s all back to normal now with booming recovery.

      They’ll raise Fed Funds 0.25% in June and no more after that, which nudges short maturities up just a bit and the 10 year nothing.

    • Yeah, 174, that is down 7 from what they were showing over the weekend.

      • toolpush says:


        So the North Dakota govt releases numbers on Monday evening, and BakerHughes releases numbers on Friday evening. Are the Baker Hughes numbers just a repeat of the government numbers, or is this a mid week snapshot with two different data bases?

        I see Oasis still has 14 rigs working. They have stated there numbers will be heading down to 6.

        • So the North Dakota govt releases numbers on Monday evening, and Baker Hughes releases numbers on Friday evening.

          No that is not the case. Yes Baker Hughes releases their data on Friday, I am not sure the exact time. But the North Dakota data is continually being updated. It seems to be updated at any time during working hours. It will change several times in the same day. The North Dakota rig count is now 171, down three from about an hour ago.

          Current Active Drilling Rig List

          Check it out. The count is 171, down 10 from Friday and down 3 from an hour ago.

          • toolpush says:

            Thanks Ron,

            I would have never guessed we had an actual live database to refer to. Monday would be the big change day, as it would be basically 3 days in one, due to no reporting on the weekend.

            Now if Texas had the same thing, with the number of rigs they have it would be constant motion, and very telling?

          • jed says:

            Yeah I was coming back to post that.

            • toolpush says:

              This is going to be a very noisy source of information, currently 172 up 1 from yesterday?

              Not saying it is not excellent information, but i can see it is going to be jumping in both directions at the same time, but I am sure we will see the general trend is going to be down for some time to come.

              • toolpush says:

                Yep, as I said this is going to be noisy, they have all gone back to work, well one has since yesterday up to 173

                Active Rigs 173

  30. Regex Wald says:

    A 2015 capex and guidance announcement from Continental has been released.

    The Company plans to decrease its current average operated rig count from approximately 50 to approximately 34 by the end of first quarter 2015 and average approximately 31 operated rigs for full-year 2015. Allocation of operated rigs include 16 in the SCOOP Woodford/Springer plays, 11 in North Dakota Bakken and four in Northwest Cana, where 50% of the costs applicable to the Company’s interest is being carried by a JV partner.

    The revised 2015 budget is based on completing 81 net wells for the SCOOP Woodford/Springer plays with no change to previous estimated ultimate recovery (“EUR”) targets. In the Bakken, the Company now expects to complete 188 net wells focused primarily in its core acreage, targeting an increased average EUR of 800,000 barrels of oil equivalent per well. In the Northwest Cana play and other areas, the Company plans to complete 11 net wells. Completed well cost estimates are expected to average at least 15% below 2014 averages as service costs adjust to lower commodity prices.

    They’ve been operating 20 or so rigs in the Bakken and 15-30 rigs in Oklahoma this year.

    • toolpush says:

      Another company cutting Bakken drilling by nearly 50%. I think Bakken will be below 100 rigs working by the end of the first quarter.

      Also I believe that is below the number required to balance depletion?

      • It’s just a guess of course, but I believe the number of rigs required to balance depletion is between 135 and 140.

        • Carl Martin says:


          Yes/no/maybe. Don’t forget the increased drilling efficiencies with pad drilling, and the huge (600+) and still growing back log of wells to be completed.

          Also, every company that can do so will now focus on high grading (sweet spots) because all low grading activities will have to stop, and the economics of all mid level grading are very questionable at present oil prices.

          This goes directly against all PO theories, but all well run extraction companies always try to (counter intuitively) low grade when the price is high, and high grade when the price is low…BECAUSE THEY HAVE TOO. The ones who don’t do this are not well run, and generally go into bankruptcy when the price goes too far down.

          Here’s a good example from above… ” In the Bakken, the Company (CLR) now expects to complete 188 net wells focused primarily in its core acreage, targeting an increased average EUR of 800,000 barrels of oil equivalent per well.”

          See, they have switched from low grading to high grading, and can likely get away with it, because they have so much high grade land (8 years of it, they claim), and they have fulfilled a lot of their lease obligations on low EUR land by low grading, when the price was high.

          Where you people have gone so gruesomely wrong is with this defunct PO idea, that all the sweet spots have been tapped out. Sorry, but that is dead wrong. But, I prefer to merely just tell you that for now, and let time prove my words right, or wrong.

        • Carl Martin says:

          “Where you people have gone so gruesomely wrong is with this defunct PO idea, that all the sweet spots have been tapped out.”

          I don’t think a Bakken well that will produce under 400,000 barrels of oil over its lifetime can be considered a “sweet spot”.

        • Dennis Coyne says:

          My guess is that 120 rigs will be enough for a slight decrease in output to about 900 kb/d and then there will be a rough plateau if 120 new wells per month can be drilled with that number of rigs. With greater rig efficiency we might be able to do it with 100 rigs.

      • Dennis Coyne says:

        Hi Toolpush,

        As companies go for efficiency they may be able to drill more holes per rig.
        Remember that companies will try to keep their best talent so the less experienced or less proficient workers will be let go, every crew left will be an “A” team member and there will be fewer mistakes, less down time and so forth. About 125 completions in the Bakken/Three forks is enough to maintain a plateau, I bet with half the number of rigs they might be able to pull that off, though Mike, ManBearPig and you would certainly know better than me how this works in the real world.

        • Mike says:

          Dennis, I did not follow your question very well regarding the number of “completions” (?) to maintain a plateau, sorry.

          On the drilling side of the equation I do not know how the shale oil folks can get a whole lot more efficient than they already are. 18-21 days now from spud to walk and spud again. That is in the EF, the Bakken cannot be a whole lot different. In theory that is 17 wells per rig per year but there will be several rig moves in that time frame, and always the problem well or three; I would say 14 wells per rig per year. I hope Toolpush will agree with that. The problem in the Bakken appears to be the lag time on frac’ing and I have no idea what that is about. I would say that if half of the stuff I hear down here in Texas comes to fruition with regards to declining rig rates, frac spreads will be caught up here pretty soon and they will be moved to ND, pronto. If those fellas up there want to frac those wells and bring them on line, they can get caught up pretty quickly with 20-25 more frac spreads. The oil industry is very resilient, it goes where the work is and can get there pretty quickly.

          Thank you for your work, Dennis. I liked the 3 mo. oil vs. water stuff. I think you might have gotten talked down on average royalty burdens in ND; I’ll bet with ORRI’s it is 22.5-23.0%. I think there is no refuting the average EUR up there that you and Enno and Shallow posted; I am pretty sure it is even less here.

          I think one of the most poignant estimates one can do at the moment in studying shale oil economics is precisely what you have done: estimate the number of barrels it takes to pay the well out and weigh that against estimated UR, divided by the number of years to recover that EUR. Then ask yourself who in their right mind would spend 9 million dollars of borrowed money to earn that kind of annual rate of return. I understand NPV but you still gotta make money and pay the piper back. The shale oil industry has been at it since 2006-2007; I don’t think it has made a nickel yet.


          • John Keller says:

            I enjoy your posts, Mike. I like your boots on the ground perspective. I’ve been a shale skeptic, mainly from seeing the financial statements put out by these companies. I read a lot of financial statements as well as company and analyst presentations. Quite clearly, the presentations are make believe when you look at their financial statements. I’ve always wondered how companies can claim 60% IRR’s for wells on an unlevered basis. On a levered basis, that would mean 100+% IRR’s. Yet, that’s not what their balance sheets look like even after a few years of $90+ oil. Anyone interested, should go look at old presentations from HK, GDP or SD. You’ll see wonderful IRR’s and EUR’s. Yet, these companies look to be on their last legs. I recently saw a Sanchez Energy presentation to analysts (it’s online) which had two type curves for the Tuscaloosa Marine Shale-600k barrels and 800k barrels. To me, that’s fraudulent inducement.

            What has been tricky for me looking at the financial statements is trying to decipher what the maintenance capex is. The constant drilling with borrowed money jacked up production. So it’s hard to see what is needed to maintain output. Rosetta Resources has projected that production will not grow between 3rd and 4th quarter. That would seem to indicate that 100% of their capex budget would be going towards maintenance capex. On a free cash flow basis (cash flow from ops. less maintenance capex) I think they will run out of well locations before being able to generate enough cash to payoff their $2billion in debt, even if oil was at $90. Their wells produce 1/3 ngl’s, natgas, and oil. On a BOE basis, that currently equates to about $25-30, I think. Yikes.

            I believe you made the comment earlier that many EF wells go on rod lift about a year after spudding which would indicate that many of these wells won’t see their ten year birthday. Did I read that right? What percent of the reserves booked are reserves that these companies claim will be produced after ten years? It seems then very likely that reserves are overstated. Also, the booking of PUD’s seems a little aggressive. Most shalies’ total reserves are about 75% PUD.

            • shallow sand says:

              John. You are one of the few to refer to reserves on this site. I look at those numbers because I thought that is what banks and investors look to when financing oil companies’ projects and/or contributing equity.

              I was under the impression that PDP was weighted most heavily by banks, etc. PUD is given value, but is discounted heavily, at least that is what I thought.

              It will be interesting to see what happens to PV10 when new, much lower price decks are used. I assume that will lead to decreased lending and therefore less drilling.

            • Mike says:

              Thanks, Mr. Keller; I learned early on from a very good structural geologist something called “creative contouring.” I don’t have to explain that to you, I know. I think there is a great deal of creative accounting principles that I am not familiar with being used by the shale oil business. You are very correct about that.

              It is, as you point out, not very smart to rely on EUR’s of shale oil companies. Those EUR’s get made within months of the wells coming on line, based primarily on “type” curves from a slurry of wells in the area, or even the trend. I don’t know how accurate they are; this is the first time in the history of the industry that we are dealing with shale source beds that are tight as a tick. They are guesses. Whatever the exact circumstances are of those estimates the fact remains, as you point out, 60% IRR or 100% IRR over the life of the well…sucks. I would not risk 9 million dollars to earn 2.4% ARR. I grew up in an oilfield where you did not get in the batter’s box unless you swung at pitches that were 3:1 ROI at least. That’s 300% IRR, not 60%.

              Its hard to get a handle on LOE’s, or incremental lift costs per barrel; I think some of these shale companies leave administrative overhead, for instance, out completely. If OWR is often 33%, as Dennis Coyne implies, that’s a lot of water to be hauling away at 3,5,7 dollars a barrel. I wish I had a better answer for you on that. I often guess at least 8 dollars a barrel, maybe 10 or more. I am with you on the yikes. It is not working. It can’t work at current net oil prices. It actually did not work at 100 dollar WTI oil.

              I am not sure what shale oil accounting principles allow but I believe that, for the most part, based on IP’s and several months of production data the decline profile will fit into the type curve and they book reserves based on that. We have heard examples up thread where shale oil advocates say 700 BOE EUR, the numbers guys with the actual data say nope, on average it is more like half of that. That is a big difference, yes?

              Wells do go on rod lift very quickly, yes sir. Generally speaking horizontal laterals 14,000 feet long are very expensive to produced on rod lift. We’ll have to see if those type curves are right and those wells make 20 BOPD, or less, for 18 years. I am worried about that.

              And lastly, my biggest pisser, the PUD thing. Apparently all you have to do is “de-risk” a block of acreage with one well and the entire block is all of a sudden deemed developed reserves. These companies then tout 8 years of drillable locations, at 700 BOE EUR per location, that sort of thing, to the public. They may not be proven developed, but grandma thinking about buying stock in Shale R Us, LLC looks at 5790 well locations at 700 BOE EUR and thinks she needs to but some stock in that company. Damn the kids, full speed ahead.

              Its funky arithmetic. Its creative marketing. Its, not being forthright. It is misleading the American public into complacency about the future of shale oil. I applaud you for questioning their propaganda. You seem to have a good handle on it.

              Give me a hundred million dollars of imaginary money you might have, not borrowed, just play money. Money you don’t care about losing. Pay be an enormous salary and an a big ORRI in every shale well you want me to drill for you. In other words, I have nothing but upside to gain from the venture. I would not, in good conscious, participate in the venture. It would not be right, and I would not do it.



              • shallow sand says:


                Appreciate your posts. Where you are, is it typical for loans on oil production to be termed out over 60 months? That is what I am familiar with, and am surprised so many 10+ year loans and bonds have been issued on high decline shale wells.

                Also, have you read my comparison of a 7.5 million dollar well with an EUR of 168,000 (I think EIA figured this for average Eagle Ford well, oil only) to a $750,000 vertical well with an EUR of 16,800? Other than possibly LOE, why aren’t these returns the same and isn’t 16,800 over 30+ years pretty weak for a 3/4 million dollar vertical well?

                • Mike says:

                  Shallow, I cannot really answer your first question, sir. I am a country boy with country bankers and whenever I have bought production the term of the note matured pretty much at planed payout of the acquisition. I have only violated my in house rule twice about borrowing money to drill wells; both times worked out, thankfully. No mas.

                  I have not read your comparison but you are precisely correct, both examples are economic disasters. At current oil prices the vertical well would never pay out. As you know, sometimes we drill prospects with lofty ideas about the upside potential, and end up being very disappointed. But to drill a 750K well with the belief the ultimate recovery will be 17K BO is well, you know. I wish that I could give examples of the kinds of returns I have achieved over the years by simply picking thru other people’s junk, but it would likely not come across well with some.

                  I appreciate your posts as well, Shallow. And MBP and Tool Push and Fernando’s, etc. All the numbers and the data and the graphs and charts are very important. But that information has to be translated into real life situations for it to be meaningful to most people. The more people understand the practical aspects of the oil and gas industry the more they will begin to trust in it. That is important to me.

                  I reached Peak Posts yesterday, however, and need to cut production. The way I am going if I don’t watch out I might end up face first in a reserve pit somewhere, beat to a pulp by some shale oil company men with big dope brushes.

                  Merry Christmas!


                  PS: You gotta love that TBoone guy. That’s what happens when you spend a life time in the oil business; you get impatient with dumb people and call the kettle black. When I grow up I wanna be just like T!

              • John Keller says:

                Thanks for insights. Your posts remind me of some of the letters and emails sourced for a New York Times article online in 2011 regarding natural gas and shale. I’m no fan of the NYT, but they did some good research. What was interesting was that they posted emails and letters online from their sources for everyone to read. Here’s the link-


                The emails are from petroleum engineers, geologists, and independent oil men risking their own money. It seems the same shenanigans described in the various emails have been used for tight oil. One thing they point out is an SEC rule change that allowed PUD’s further out from a drilled well than in the past. It’s going to be interesting to see how everything plays out.

                Merry Christmas,


          • Dennis Coyne says:

            Hi Mike,

            I was wondering about my claim (which may be incorrect), that during a bust the less qualified or hard working people get laid off and a company is left with their best workers.

            If that is correct it would seem that the elite crew that remains would make fewer mistakes and get more accomplished on average on any given day. This would tend to increase rig efficiency (number of wells drilled per month per rig) if we assume everything else is unchanged (which is never correct in the real world.)

            Do I have that part right?

            • Mike says:

              Dennis, company men (middle management, on site supervisors) get comfortable with certain rigs and the personal on those rigs. If Dennis is given 14 wells to drill in 2015 he will stick with H&P 395, if he can, because he is on a first name basis with the toolpusher and everyone else and they all work in 3 part harmony; hands will stay with a rig and the rig boss (toolpusher). There might be some inner rig contractor personal movement based on time with the company, etc., I don’t know anymore. If Nabors 419 gets stacked, most of the hands on that rig will go to the house. When I roughnecked, and was a driller, when my rig got stacked I went mostly to the wine shop and waited it out. Certain companies generally ask for certain rigs if they can.

              Again, I don’t think rig efficiency can improve much; I think I have already said as much. Those shale rigs get it and go. Its like tire manufacturing, almost. There is always a problem that comes up. Think of all the wells they have drilled in the past 7 years; everyone on a rig, and steering, and running casing, and cementing and frac’ing know what the drill is now. Fourteen wells per rig per year is what I guess, maybe 15 depending on pad stuff. Costs will not go down based on efficiency as much as competition between rig and pumping services vying for limited work.


  31. canabuck says:

    re: Measuring de-growth in the world.
    During the 1997 “asian flu” economic crisis, it was said that 2/3rds of the world’s economies were in recession at the same time. I wonder what the number is now.
    Greece is a good example of what can happen to a society after 6 years of recession.
    As “peak oil” takes a hold, one can imagine that a large number of countries will slip into recession.
    But, nuclear power is a solid power generator, and will take over if fossil fuels start to wane.

    • oldfarmermac says:

      I for one expect nuclear power- the usual fission power kind- to make a huge comeback as various countries discover that fixed payments on a few nukes are more easily managed than importing coal and natural gas at unpredictable prices that are eventually going thru the roof – not to mention the possibility that politics or outright war can result in nothing available to import at any price at all for extended periods of time.

      There is enough uranium to run a long time and enough spent fuel that can if necessary be fed thru to extend the supply. If breeders prove to be feasible with more research and development the world is home free on electricity except for two awesomely tough nuts- weapons and long term pollution.

      I believe it is possible to extract uranium at sea water at a cost that is acceptable to use it as nuclear fuel given that so little provides so much energy.

    • Heinrich Leopold says:

      Actually the world is experiencing a growing boom due to falling oil prices. The Chinese stock maket is soaring as I have never seen it – up over 50% in just three months. The AAR weekly rail traffic indicator for Canada shows metallic ores shipments up 30%, Mexican petroleum and petroleum products up 87,3%… Furthermore emerging countries are just experiencing exploding growth: Indonesia industrial production up 10%, Indian metallic ores imports up 100%….. This is hardly a bearish scenario. China is now the biggest animal in the pond (Chinese GDP in PPR is higher than the US GDP) and is financed in yuan and not US dollars. Most countries are financed in their own currency – and not anymore in US dollars. Most Asian countries have today a current account surplus. And very important most countries have vast currency reserves due to the high current account deficit of the US over the last decade. As long as the yuan stays stable and Chinese inflation stays low, the world will just keep growing very fast.

  32. Ronald Walter says:

    If there are 259,000 wind turbines turning circles two hundred feet in diameter and are responsible for 500,000 bird deaths per year, reportedly 35,000 raptors bit the dust, the wind turbines are killing eagles in California, but that doesn’t matter, then 3,800,000 wind turbines should then have a kill rate of maybe 7,500,000 birds, not to mention bats and bugs, each and every year. But you just never know, the count might be higher than that, might be a good idea to visit some wind turbines and count how many dead birds there are 1000 meters in a radius from each base of each wind turbine to have an accurate count. Be a good study for someone out there to complete. Just to find an answer instead of denial of what is happening to birds when they come in contact with the blades of those wind turbines. You just don’t know until the work proceeds and the results are in. You don’t what you’ve got until it is gone.

    It becomes essentially a war of all against all. Wouldn’t that be something? The birds might seek revenge and Alfred’s movie becomes real life. Birds like a pair of eagles bearing down on a grizzly bear in Alaska.

    Here’s what it looks like in the real world:

    To strive to seek to find and not to yield said Tennyson. Words above a doorway in the hallowed halls of the Library of Congress.

    Might want to reconsider some priorities and question if energy from wind in its current incarnation is worth the effort, it just could do more harm than good. Become the bane of existence. Just take a good look at what oil has done and is doing, it’s pure madness. Wind will be the same, no difference. Oil, wind, it won’t matter.

    Sow the wind, reap a whirlybird.

    You just never know, you know. Look what is happening to oil and the industry, ripped and torn to shreds.

    • Nick G says:

      Cats kill 100s of millions of birds annually.

      The Audobon society strongly supports wind power.

      • SRSrocco says:

        Wind Farms are a LOUSY INVESTMENT… which is why BP tried to sell their entire holdings last year, but couldn’t find any buyers STUPID enough to unload them to. Which is also why they did an ABOUT-FACE and stated publicly that they were going to hold onto the “Wonderful Green Energy Investments.”…..LOL.

        Unless a PUBLIC UTILITY COMPANY pays 2-3 times the going wholesale electric rate for SOLAR or WIND, these GREEN TURDS don’t pay for back the original investment over the depreciated lifespan of the project.

        Just another way of saying… CHALK IT UP TO ANOTHER BOONDOGGLE


        • Boomer II says:

          Unless a PUBLIC UTILITY COMPANY pays 2-3 times the going wholesale electric rate for SOLAR or WIND, these GREEN TURDS don’t pay for back the original investment over the depreciated lifespan of the project.

          I haven’t seen anything about wind and solar generated electricity being 2 or 3 times more than coal and gas fired generation, but I know there are people who are willing to pay more and indicate so on their utility contracts. So if some consumers want to subsidize renewables for others, so be it.

          It has been good business for some companies to say they are powered 100% by renewable energy.

        • Nick G says:

          Oddly enough, the EIA disagrees with you: wind is cheaper than new coal and nuclear, and only a little more expensive than gas.

          And gas can’t stay cheap forever…

        • sunnnv says:

          They couldn’t find any buyers willing to pay BP what BP wanted, NOT no buyers at all.
          They had “a number of offers”.

          as far as “boondoggle”,
          wind and solar, with zero marginal cost, have trashed the profitable peaks that made fossil fuel generators so profitable.

          Wholesale rates going to zero or negative just didn’t happen before big wind and solar came along.
          More storage and transmission reduces this somewhat, but renewables are still biting into the peak.

          The fake capitalists (in the fossil fuel industry) are decrying somebody else’s subsidies, but wanting to maintain/increase their own.

  33. Ovi Colavincenzo, who follows this blog pretty close, posted me the following which gathered from the IEA Oil Market Report. Ovi says:

    I keep track of the oil production info published by the IEA, Table 3 in the attached report. Today I updated the October and November production and I found a surprise. Attached is a chart of crude only production from the Neutral Zone. This is an area shared by Kuwait and Saudi Arabia and the oil is split between them. As you can see production from 2003 till April 2014 wandered between 0.5 Mb/d to 0.6 Mb/d. In May it bounced back to 0.52 Mb/d but then collapsed. This is what the November IEA report says:

    “Kuwaiti production eased by 50 kb/d to 2.82 mb/d in October following Saudi Arabia’s closure of the Khafji oil field in the Neutral Zone, run jointly with Kuwait, apparently for environmental and technical reasons. The offshore field had been pumping close to 300 kb/d before it was shut down in late October.

    The onshore portion of the Neutral Zone, the Wafra field, continues to produce at around 200 kb/d. It is not clear at this stage when Khafji will return to full production. Neutral Zone output had been declining before Riyadh’s unilateral closure: production had slumped towards 350 kb/d in August, but recovered to 400 kb/d in September. Kuwait’s share of the Neutral Zone accounts for nearly 10% of its total capacity and is crucial to meeting production targets. By contrast, the Neutral Zone accounts for only 2% of Saudi capacity.”

    And my two cents worth: This old giant field is clearly in decline but years of infill drilling has kept production at over half a million barrels per day. But has the water reached those horizontal wells at the top of the reservoir? Is this a Seneca Cliff?

  34. Frugal says:

    For environmental and technical reasons?? Never heard that combination before — usually it’s one or the other.

  35. B says:

    Recommend reading the full article. It’s quite long and full of information.

    Bakken boom looks to uncertainty in 2015

    [Excerpt from article]
    Not far from [director of the North Dakota Department of Mineral Resources Lynn] Helms’ office on Calgary Avenue [in Bismarck, ND], Eugene Graner is in his, using eight monitors to track commodity prices and stock reports. Two flat screens opposite his desk are tuned to all-day news stations with market updates running in ribbons on the bottom of the screen.

    Graner, president of Heartland Investor Services Inc., publishes a market newsletter, heads the state’s largest commodity brokerage and is a go-to guy for short- and long-term market analysis….

    Graner said he’s not surprised [by the drop in oil prices]. As early as July he started warning people who’d invested in Bakken-focused companies to protect their money. His company manages commodity portfolios, not stock portfolios, but he could see trouble coming….

    He doesn’t attribute the price drop to Saudi oil production either, like some do, because that’s been constant at 30 million barrels a day. “All they’ve said is they would continue at 30 million day. The world is using 89 million barrels a day and producing 90 million.

    Even if demand has softened, that’s not enough to justify a 50 percent drop in price. Something changed,” he said.

    Supply and demand are part of the equation, but the largest part is the fact that all oil in the world is priced at the U.S. dollar, he said.

    “The U.S. dollar exploded in value and created a displacement value in all commodities,” he said. “This is a multi-year event and it’s not going to go away.”

    Graner said he thinks the state’s [2015] rig prediction is still too high, because officials and politicians tend to soften bad news.

    “No matter what they say, the downside is always much worse. It’s real and it’s going to stay,” he said. If the Federal Reserve increases interest rates next fall, as it’s discussing, oil value will fall off into the $40s, he said.

    For now, Graner says, “A lot of drillers will be shutting down. The fringe (oil development area) is going to take a hit, but there will be pressure in the (drilling) sweet spot.”

    He said Williston will go from being insane to just a little crazy as the new normal kicks in. Established oil companies will survive, but “Johnny-come-latelies are not going to make it,” he said.

    “I don’t feel nervous. It just got of hand. Oil is still needed. We had a bubble, but the bubble burst and most are still in denial. This brings us back to reality. It will help North Dakota get caught up with its way of life and infrastructure,” he said.

    Helms says it’s important to look at the situation from the right end of the binoculars.

    “I expect this to have a short-term impact on a long-term play. Even if (Graner) is right about two years (low prices), that’s only 10 percent of a 25-year program. We still have 60,000 wells to drill,” he said.

    The biggest risk, and he’s seen it happen before, is the displacement of oil workers, who left home for good jobs in North Dakota. “If the price stays low long enough and there are layoffs, they go home and don’t come back. When oil prices recover, which they will, it will be much harder and more expensive to fill those jobs.“

    For that reason, Helms said oil companies will resist making cuts too quickly.

    The Department of Mineral Resources conservatively pegs about 120 jobs to every rig drilling.

    Helms still expects in the range of 1,000 to 1,500 new wells drilled in 2015, about half of what’s been average, and a sizeable number of the 650 drilled wells waiting hydraulic fracturing to be completed.

    Oil companies are only allowed one year between drilling and fracking, or completing the well. But fracking now exceeds the cost of drilling by a $5 million to $4 million ratio on an average $9 million well.

    Emergency extensions have been granted in past years, but Helms is unsure whether that will come into play this time around.

    Helms said in the past month he’s seen more companies willing to top lease, or renegotiate mineral leases, essentially buying more time until it has to hold the lease with actual oil production, than actually drilling the well.

    “It’s cheaper now to renegotiate,” he said.

    This top lease opportunity affects a relatively small number of them. The department estimates that less than 15 percent of leases in the core Bakken area are not drilled.

    If the daily closing WTI price averages less than $55 a barrel for a month, drillers can take advantage of a trigger in state law that knocks 4 percent off the extraction tax. The trigger expires in July and only applies to the first 75,000 barrels of production.

    A separate trigger kicks in if oil stays below $52.50 for five consecutive months, in which case the 6.5 percent extraction tax is suspended for up to two years, a scenario that was nearly reached in 2009.

    Monte Besler, owner of Fracn8tr, a fracking consultant company, said he was recently shut down in the middle of a fracking job and another client operator has significantly scaled back operations.

    There’s already talk that a Stanley housing development will be emptied out by the layoff of a 75-man rig moving crew.
    [End of Excerpt]

    To reiterate an important point, Oil companies are only allowed one year between drilling and fracking, or completing the well. But fracking now exceeds the cost of drilling by a $5 million to $4 million ratio on an average $9 million well.

    Emergency extensions have been granted in past years, but Helms is unsure whether that will come into play this time around.

    • Helms still expects in the range of 1,000 to 1,500 new wells drilled in 2015, about half of what’s been average, and a sizeable number of the 650 drilled wells waiting hydraulic fracturing to be completed.

      Oil companies are only allowed one year between drilling and fracking, or completing the well. But fracking now exceeds the cost of drilling by a $5 million to $4 million ratio on an average $9 million well.

      That answers two questions several people have asked over the last couple of years. Yes, “awaiting completion” means the well has been drilled but not yet fracked. And it cost about 4 million to drill a well and about 5 million to frack a well.

      I knew drilling was slowing down but I had no idea fracking was slowing down by the same amount or greater. I figured if half the money had already been spent they would finish the job. But the fact that one fracking crew was pulled off while right in the middle of a frack job is very significant. A slowdown in fracking equivalent slowdown in drilling means an immediate drop in production. I had assumed the big drop would not hit until those 650 wells awaiting fracking were competed.

      • Frugal says:

        Hard to believe that anyone would pull out after invsting half the cost. This can only mean one thing, the tight oil companies are so deeply in debt that investors aren’t willing to pay for the fracking to complete the wells. In other words the investors think the companies are going to go broke in any case and don’t want to through good money after bad money.

        • oldfarmermac says:

          It may be that some of these wells that have been drilled but not fracked will be in new owners hands pretty soon. The existing debt will be wiped out at and during the bankruptcy of the company that did the drilling.

          The new owners may or may not be able to raise the five million needed to do the Frack job. I suppose they will be able to raise it in some cases at least. In other cases they will be gambling on flipping their investment.

          • Ves says:

            Nobody is scrambling to buy these wells. When you have rising prices you can start the cycle. When you have deflationary cycle run its course it is all done. As I suggested a week ago companies (small shale) will always trim/cut/lay off /close/abandon FIRST then the countries (big companies that represent them ARAMCO,Statoil, Rosneft) . Shale will be completely done in less then 2 year time.

      • toolpush says:

        “But the fact that one fracking crew was pulled off while right in the middle of a frack job”

        That sounds like the bailiffs were called in?

    • Watcher says:

      “The U.S. dollar exploded in value and created a displacement value in all commodities,” he said. “This is a multi-year event and it’s not going to go away.”…

      Well, some people are right and others are not. But I’m not relinquishing my spot on the mountain to sit on and say OMMMMMMMMMMMMMMMM.

      This morning US Q3 GDP revision . . . 5%. Now we’ll hear how all other countries are in freefall because with 50% of S&P earnings non domestic, somehow this 5% number says nothing of other country consumption. Just US consumption. As WTI plummeted.

      The US dollar shows no sign of weakening. Or rather the other currencies show no sign of strengthening.

      I’m enjoying “when the price of oil goes back up, and it will, blah blah blah blah”. And “the established companies will get through this but the others blah blah blah blah”.

      If friggin CHEVRON were a major driller in the Bakken, they’d be closing up shop, too. If the price is lethal, the price is lethal for everyone. Equal opportunity lethality. In one breath we have economies of scale not working, that the suppliers are going to cut their own throats in order to keep the wheels turning. In the next breath, economies of scale are everything with established companies surviving and others, not.

      Equal opportunity lethality. I hereby create a new acronym. EOL.

      • Mike says:

        This frac’ing inventory in the Bakken has always been a mystery to me and, frankly, hard to believe. We have, had, more rigs running in the Eagle Ford, more wells being drilled and I would be surprised if there are 200 wells awaiting frac’ing throughout the entire trend. In fact, just yesterday I saw two entire spreads parked and idle, something I have not seen in a long time. I have no idea why ND is that far behind, if they are.

        Again, shale wells cannot be frac’ed, then shut in; they have to be flowed back and produced to benefit from induced frac energy and to prevent fracture closure. It would be far better to not frac a well and simply hold it in inventory pending price improvement.

        “Oil companies are only allowed one year between drilling and fracking, or completing the well.” This statement is a little misleading. Lessees are required to operate within the exact terms of their mineral lease as to what must be done to comply with the lease and perpetuate it. In other words, it is NOT the state of ND that dictates when a well must be completed, that is a matter between Lessor and Lessee. That is certainly the case in Texas and elsewhere in the US. An extension of a mineral lease for any number of reasons is doable, it just usually costs the Lessee additional money. It will pay that to prevent the loss of sunk costs in the completed wellbore. It is also often in the best interest of a Lessee to extend.

        I don’t think there are too many people in the oil business that believe this oil price thing can last more than a year, or year and a half. So, it is most definitely in the best interest of an operator with wells to be frac’ed to get an extension to its lease and frac the well when it feels like there is light at the end of the tunnel.


      • oldfarmermac says:

        But the majors – or at least the super majors- AREN’T in the Bakken.

        So far as I can tell only a few outfits that can be considered majors are in tight oil but that depends on the definition of ” major” of course.

        And while Chevron may not be bringing any new production online at sixty the company CAN ride out a year or two of sixtyish prices- especially considering that later on a general lack of investment industry wide now almost guarantees that Chevron’s legacy production – a lot of it long since paid for no doubt- will be worth a hundred bucks again or maybe more in a year or two.

        I don’t see any reason why any of the big companies with good balance sheets that are mostly in conventional oil can’t make it thru a couple of years of low prices. Nickel and dime farmers manage to get thru a couple of losing back to back years at least a couple of times during their careers.

        If a company such as Chevron cuts capex deep enough it will probably show a profit even at sixty bucks at least for the next few months given that big companies can hedge too.

        But I am only guessing about the hedging. Chevron may or may not have hedged and may or may not have contracted deliveries at a set price well ahead to a number of major customers.These CUSTOMERS may have hedged.

  36. Shale and the Falling Price of Oil

    Part of the reason for this new Saudi attitude is that the country’s leaders are tired of doing all the heavy lifting for the other OPEC members — who then keep their spigots completely open and take advantage of the high prices the Saudis are making possible.

    This is what I have been saying all along. I am glad to see someone at the New York times agrees with me.

    • Lloyd says:

      It’s obvious to me now: the USA should join OPEC.


      • Mike says:

        The Organization of Shale Oil Producers (OSOP) is set to join OPEC next year. They’ll meet in Bismark; chicken fried steaks and Jack Daniels are on the after meeting buffet menu. H. Hamms ex will be the keynote speaker and Willie Nelson will sing mama’s don’t let your sons grow up to be oilmen.

    • oldfarmermac says:

      In the real world of international relationships and commerce it is rare that a country will engage in a given course of behavior for only one reason.

      Being tired of doing the heavy lifting while the rest of the cartel members – not to mention all the other oil exports who aren’t even members- reap the full benefits of higher prices is certainly reason enough in and of itself for Saudi Arabia to just maintain production and give the other exporting countries time to bleed and think over being a little more cooperative later on.

      But there are several other good reasons as well for them to maintain production. I listed some of the more important ones of them a few days back.

    • Byron Walter says:

      And it sounds like Libya just became a net importer…

      …due to renewed fighting.

      And based on what we’ve read back in July, it will be interesting to see what happens with Russian oil production in 2015 from a combination of geology and scarce capital. As recently posted in the Financial Times:

      • toolpush says:

        Interesting, Libya’s increased oil production was one of the tangible reasons given for the drop in the price of oil. Now that increased production/export has evaporated, will that tighten the supplies from this so called glut?

        • Byron Walter says:

          I doubt it. Still a bear market. Who knows what things will look like by Q2 2015 since there are so many variables with respect to demand and supply. But LTO and the US drop in demand are two of the biggest factors for sure. Without LTO things would be very interesting and that market is roiling with the current price structure.

        • Synapsid says:


          I’ve been trying for a couple of months, by looking and by making heartfelt appeals on this site and others, to find any numbers on Libyan exports, and have come up empty. I have come to doubt that the country has exported much oil, this quarter at least.

          That doesn’t mean that the idea of Libyan exports being significant, on the global scale, hasn’t played a role in the growth of the idea that there is a surplus or glut of oil in the world. I recall that the oil crisis in 1973 did not involve a shortage of oil–the perception that there was a shortage was enough.

  37. Watcher says:

    tra la tra la

    This dood is reading this blog.

  38. Rita says:

    Bankers Petroleum which operates the biggest on shore oil field in Europe, Patos-Marinza in Albania,will rest 3 rigs out of 6 in 2015. They say it is because of the low price. They have increased oil production 10% per year in the last years, due to the horizontal wells, but for next year they foresee no production increase. I have seen profiles of their horizontal wells and within 12-18 months their production is 50 % less. Their water injection activity has caused a lot of propery damage in the area, but the government has turned a blind eye. A whole village with uninhabitable houses and people having nowhere to go. If they protest the police arrests them. Local people think Bankers is producing oil through undergroung blasts (could it be?). Maybe this slowdown will spare some houses.Bankers is also good at manipulating balance sheets looking unprofitable for 5 years now, so the state budget won’t feel much of the slow down. No word of this slow down in the albanian media. They only pound thea good news.

  39. Techsan says:

    An interesting comment on CNBC by T. Boone Pickens:

    <A href=";)

    Pickens is saying that non-US oil peaked in 2005 [which, of course, it did], but the CNBC commentators seem to be trying very hard to refute Peak Oil. They keep interrupting Pickens and won’t let him talk, so he finally says “Look, I’m the expert, not you guys!” This was extremely rude on the part of CNBC, IMO.

  40. toolpush says:

    Is this a bankruptcy?

    “Invitation to Bid”
    “Sundhagen #1”

    • Mike says:

      Push, this would be SOP for an orphaned well that the state has assumed responsibility for, must P&A, and is now trying to salvage production equipment to recover costs. The state has no use for production equipment.. This would likely have nothing to do with the recent turn down; its an old well, I am sure, as the process from abandonment to being classified as orphaned is pretty long.

      By the way, I can think of a number of reasons why a frac operation commences then stops, most of which would be mechanical in nature. Maybe the casing split; whatever.

      • toolpush says:


        I agree that there could be mechanical issues or logistical reasons why a frac job could be stopped, I had one stopped due to an act of god! Well if you believe god controls the lightening strikes, then it was an act of god. Fried a heap of electronics.

        “Monte Besler, owner of Fracn8tr, a fracking consultant company, said he was recently shut down in the middle of a fracking job and another client operator has significantly scaled back operations.”

        This quote is from the owner of the frac company, surely he would know of any mechanical issues involved. It certainly sounds like a managerial or financial issue to me. But we are all just guessing at this stage. I am sure it won’t belong before our guesses will be from the front page of the financial pages as companies finally have to come clean with their numbers.

        • Mike says:

          Push, I guess it would not be unreasonable to imagine the first stage of a 30 stage frac screening out the day that WTI was down 3.00 and the operator saying, screw this, rig that shit down. I have gotten “upset” with service companies before and told them to rig their stuff down. Or, the jefe on the frac spread gets a call from the home office in Houston saying, shut that shit down, now, their check bounced. Whatever you say happened, happened. Who knows the reasons. Lots of really extenuating things happen in the oilfield; we can write a book about stuff like that. Lightening? Cool. I damn near got my neck broke trying to saw a thread protector off a mama cow’s leg one time.

    • Regex Wald says:

      “Rio Petro, LTD” had been operating that well, drilled in 1979, as a water source, but not since 2008. This was the only well that company operated in North Dakota. They up and left, leaving equipment behind.

  41. Longtimber says:

    As CNBC is thoroughly unprofessional, time to jack up standards round here @ POB.
    Weirder than fracking … yep.. here’s a little Story about a man JED.

  42. Petro says:

    To all:

    …this is a gem:

    one doesn’t see this often on msm…. must have slipped through the cracks…somehow…

    Happy Holidays to All!

    Be well,


    P.S.: if someone else already linked this, my apologies!

    • Pickens said Saudi cannot produce more than 10 million billion barrels per day. Well someone else agrees with me. I wish he had went farther and said that there is no OPEC spare capacity. I am sure he knows that.

      • Huckleberry Finn says:

        Joe Kernan is a complete moron. He was mocking T.Boone, who was predicting higher prices all the way from $30 to $140 in 2004-2008. At current growth rates, Saudi’s will consume an additional 1 million barrels per day of their own consumption in 5 years. Ditto for Russia. Gonna be very interesting.

      • Petro says:

        …”I am sure he knows that.”…

        -Yes he does, Ron! Yes he does!
        That’s precisely why he reacted with the lexicon and facial expression he did when his “old buddy” Joe “challenged” his point of view and tried to portray him as a “same ol’, same ol’ ” charlatan!
        Pickens may not have the capability of writing “Of Fossil Fuels and Human Destiny” and “The Grand Illusion”, but when it comes to that oil barrel, man – he knows very well what’s coming!
        And the imbecile Joe got it (or was told) at the end that you do not mess with T.Boone…so we have to end on football and the “come again when in NYC…” bullshit.

        “Well someone else agrees with me”
        I would argue with some accuracy that a few more than “someone” do indeed agree with you Ron, but your ultimate proof of vindication and sign that what you narrate about is close…very close, stands with the fact that idiots akin to Joe Kernan, Ron Insana, etc. feel confident and knowledgeable enough on mocking Matt Simmons…

        -As Mr. Joseph Kennedy said: “…when the shoe shine boy gives you stock tips, cash out and stuff the mattress…”.

        Be well,


    • Frugal says:

      Pickens also failed to mention that oil extraction costs have gone way up in the last decade and that the high price is the main reason that the US production is way up, i.e, high price = more oil, low price = peak oil.

      • Longtimber says:

        PRICELESS to see the whole interview. !! Ditto: What Mr Pickings is trying to say, if Mr Kernan would shut the BS up .. HIGH PRICE = Oil ++ , The solution to LOW PRICE IS LOW PRICE =Stack m rigs once AGAIN. Peak world Oil likely 2005, but just a point on the curve, just the beginning of the end of an age. Shale unlikely to deliver affordable Crude vital to the as built economy. By pointing to the 2005 peak, he may be bracing the audience for a limited OIL future in Shales, where it is clear Shale can source lot’s o gas and NGL’s with todays technology and existing infrastructure WHEN price normalizes . Too bad only pieces of the puzzle gets thru. At Least CNBC has not yet given TBone the boot al la CNN. Gotta sell those washing machines.

    • CNBC’s Kiernan Demonstrates He Does Not Understand Peak Oil In Conversation With Boone Pickens

      What Kiernan fails to understand is that peak oil does not happen overnight. We have hit the peak of conventional low cost oil production and demand exceeding that conventional oil production has pushed prices up to a level where higher cost oil is now possible to develop.

      If we had an option, we wouldn’t be spending money to produce shale oil, because it is high cost. But at the current level of demand we need shale production. That is why the drop in oil prices is not going to be permanent. The price of oil needs to be at a level that allows shale production to continue.

      • Longtimber says:

        Who in the media references Peak oil dynamics still has a job? Time for a channel? POB, TOD, POD ? Who shall sponsor? Marry Xmas. Xmas card via Repost from last POB thread:

  43. Jeffrey J. Brown says:

    Drilling permits in Texas down about 50% from October, 2014 to November, 2014:

  44. oldfarmermac says:

    I have seen a link – here I think – to somebody who says that we are world wide producing ninety million barrels and consuming only eighty nine- and that one million barrels is not enough to explain the price crashing so low.

    It is probably true that the price of oil is not so highly inelastic that the price would fall by close to half on an increase in supply that is only a little over one percent- if the end users were to have TIME ENOUGH to change their behavior to take advantage of the new price.

    But it is in the nature of things that people individually and or collectively WON’T change their oil consumption habits VERY MUCH over the course of such a short period of time as three months.

    So that extra million barrels is having the same effect on the price as a relatively minor fender bender at a key spot does on freeway traffic at rush hour- it slows traffic (price ) to a crawl.

    I am not free to just jump in my old four by four truck and take a thousand mile trip with it at on a whim. But if the price of oil stays down the potential savings on gasoline make it likely that I will get around to this long anticipated trip some time this upcoming spring or summer.There is something at the other end that won’t fit in the car that gets twice the mileage- something worth hauling home if gas stays down.

    The bass and ski boats sitting unused very much for the last few years will get cleaned up and tuned up and be back on the water this summer if Joe Sixpack has a regular job given that a day water-skiing or bass fishing often means spending three or four hundred bucks for gas at four bucks a gallon.Towing boats a hundred miles and running big outboard motors for hours on end sucks up a lot of gas.

    The old clunker that still runs but gets only twelve to fifteen mpg will more than likely still be on the road next fall if gas stays at a little over two bucks instead of on its way to a steel mill via a wrecking yard in the case of a minor breakdown.

    People who use oil heat will turn the thermostat up a few degrees if they previously lowered it to save some money.All this sort of thing will have the effect of restoring the balance between supply and demand at a higher price – how much higher is anybody’s guess.

    But it will take a few months for this willingness to buy more at the new lower price to show up in the price going back up.The average consumer probably will not increase his consumption at a whole lot faster rate than the producer can cut back deliveries.

    When there is a temporary surplus of some perishable crop on the market the price crashes…. temporarily.

    Now oil is NOT perishable in the sense that a tomato is perishable but nevertheless if it is produced it MUST be sold except for the very small fraction of production that goes into storage. And not only MUST it be sold…….. It must be sold quick enough to make room for the NEXT INCOMING DELIVERY if you are a refiner.If you are a wholesaler. If you are a retailer. You must sell it for whatever it will bring to make room for the next incoming delivery.

    So- since the refiners have to sell it dirt cheap to get RID of it- they necessarily are paying less to producers. The producers are the only people who don’t have INCOMING DELIVERY problems. They will solve the price problem by way of some of them going out of business.But it will take a while- a few months at least.

    I will hazard a wild guess that if production really was eighty nine million with the price at a hundred plus or minus that with production at ninety million -if it is- that the price will settle at maybe seventy five or eighty bucks.

    The accident must be cleared away before traffic can move normally again.

    Supply demand and price of any given commodity are like three bugs circling a light that itself is moving – such as a light on a slow moving boat in a small harbor. The bugs can keep up with the boat and the light ok and sometimes, most of the time they are flying fairly even stable more or less circles.At other times their orbits get bent out of shape for one reason or another.

    The moving light is the overall economy.It changes but not very fast – not so fast that the commodity bugs can’t keep up except for brief periods. They always CATCH UP again.

    • oldfarmermac says:

      What I was getting at in the above comment but got distracted is that in a commodity market an imbalance between supply and demand usually or often results in the price overshooting either up or down beyond what the new price will be when things settle down a bit.

      Sometimes this is called the pendulum swinging to far to one side or the other or the rebound effect.

      When the pundits are all wound up like banjo strings they tend to forget that such wild swings in prices generally moderate fairly quickly depending on how long it takes suppliers to either bring more product to market or to cut back on deliveries.Prices overshoot both up and down.

  45. Ronald Walter says:

    I’m thinking about a short vacation to Oklahoma to fill up on that gas that is 1.99 per gallon. It will be a ten state jaunt over to Oklahoma, but it might be worth the trip. I’ll save fifty-one cents per gallon, a twenty percent savings, so it can’t be all bad. Buy beer along the way, drink and drive every back road until I’m lost and end up in Uncertain, Texas then catch a plane to the Azores for a burger. Buy a new vehicle when I get back, have the trade secured with the old used no good piece of junk that has to be driven into the ground, the back to Oklahoma for gas at 1.49 per gallon for the return trip through Oklahoma.

    Why drill for oil for Oklahoma when you just have to ship it there by pipeline and the Oklahomanites have all the storage and it’s right there for them? Might as well give it away at 1.29 tomorrow.

    Cancel all of the debt owed for the drilling costs on all shale developments in Texas, Colorado, Wyoming, Kansas, Pennsylvania, North Dakota, Montana, Saskatchewan, Alberta, Mexico even and sell the oil for 10 dollars per barrel right now. Might as well crash it right to the bottom of the barrel.

  46. toolpush says:

    It looks like the the US oil refiners like a bargain when they see one.
    “U.S. crude oil imports averaged 8.3 million barrels per day last week,
    up by 1.2 million barrels per day from the previous week. Over the last
    four weeks, crude oil imports averaged 7.6 million barrels per day”

    They don’t seem to worried about the so called glut of US oil production with an increase of oil imports like that?

    • Old farmer mac says:

      I guess there must still be a few empty tank farms out there someplace. Or maybe they are pumping it into old salt mines or even down an old oil well. I know old salt mines can be used for long term crude storage and I seem to remember something about it being possible to store crude in certain old wells depending on the location and the price and the local geology.

      The people buying up so much extra are probably expecting the price to go up enough to make some money over the next few weeks or months.

      • toolpush says:


        That was always one of the funniest things about this “Oil Glut”. The US stocks though they were in the upper range, were certainly not overfull. Now I know the US is not the world, but they do use 25% of the words oil, and do put out some of the best number on a timely manner, and therefore a good guide to what is going on in the market, but maybe there were keeping their powder dry, and are now racing to fill their boots, while the 50% discount sign is still on display.

    • Synapsid says:


      Them’s refiners; they’re at 93.5% capacity and having a high old time producing gasoline and diesel. They export mostly to the Caribbean and Latin America (correct me on this?), and Brazil has been a big market for a while, not having yet fulfilled its promise.

  47. Frugal says:

    Watching for a drilling slowdown in North Dakota

    According to this article, drilling in North Dakota hasn’t slowed down yet. It also thinks that the break-even price is $50/barrel.

    • toolpush says:


      That article was written on the 8 Dec, since then, the rig count has dropped 10% and Oasis and Continental, has announcements to take another 10% off line early next year. So when a few more companies own up and make their cut backs public, we will be talking some serious numbers. It looks like the oil companies are cutting their Bakken drilling in half, so expect 100 or less rigs drilling sometime next year.

      • Mike says:

        If you are working tonight, Push; be safe and Merry Christmas.


        • toolpush says:


          I appreciate the concern, but to let you in on a secret, just between you and me, I am sitting on a warm stacked rig in Singapore, and just to make sure we didn’t have too many reports to write, we didn’t do much Christmas Day. I will not go into to the economics of what is going on with the rig concerned, but someone must be making some money some how, and it is beyond my position to work out how.
          There are some times when to scream and shout, and there are other times to keep quiet and a low profile. I am choosing the later, and it may explain why I have time to spend on the Peakoilbarrel.
          I wish you you all a Merry Christmas, as I realize most of you have a little catching up to do, being so many hours behind, and I am sure we will all have an interesting New Year.

    • Old farmer mac says:

      There is a truly major difference between plotting to MAKE something happen – which requires more than just plotting- and being happy that it HAS Happened.

      Collusion requires ACTION- whereas neither the US nor Saudia Arabia has done anything that could be reasonably attributed to PLOTTING against the Russians. Does anybody here think the American government brought the tight oil industry into existence in order to play international power politics?

      This is too big a stretch for me.

      Now as to whether Uncle Sam is happy the Saudis have not cut back production – no doubt Uncle is glad indeed. Cheap energy is an adrenalin shot in the economy’s arm and it is my opinion that Uncle is perfectly happy with the domestic tight oil industry twisting in the wind like a snake run over in the road given that there are hundreds of millions of voters who are interested in cheap oils and only maybe a million who work in the industry.

      The Saudis have plenty of good reasons to maintain production. My own personal pick for the most important one is that they are thoroughly sick and tired of toting the rest of the cartels members load- not to mention other exporting countries load- when it comes to cutting back production.The general pattern in the past has been for the Saudis to bear the costs while just about all the other exporters reap the benefits.

      But the Saudis DO owe us big time indeed. How big? How about their position as the royal family and defacto owners of the country? Without us the royal family would be either dead or refugees scattered among whatever countries the individual members could get into.They wouldn’t last a year without the shelter we provide with our military umbrella.

      So going along with what we want – when it suits them to do so anyway- is easy enough for them.

      I prefer to think that in this case our mutual interests just happened to line up nicely.Collusion was or is not necessary.

    • Caelan MacIntyre says:

      The news this year has seemed especially weird and suspicious… North Korea, Cuba, Ukraine, Russia… all “Commie”, so to speak, all at once…
      …Old enemies anew in the eyes of a shrinking, increasingly-sclerotic and spiritually, financially and ethically-bankrupt empire…
      (Kunstler seems to especially like that word, ‘sclerotic’.)
      The hammer and sickle are handy instruments for different (and post-decline) uses, as well as the proverbial pitchfork and scythe of course…

      That all this and ebola too is still conjecture through the police-escorted black opaque-glassed limousine parades just helps to harden the sense that it won’t change for the better before it’s too late…

      …Maybe the ‘Commies’ might have an extra thing or two to advise on what to do about the increasingly-restive pawns, peons and peasants… Seeing as foreign incursions of the crony-capitalist plutarchy kind have been one freak-show after another…

      …Hey, are those some kind of metal-sharpening and hammering sounds I hear in the distance?…

  48. Pingback: Anonymous

  49. FreddyW says:

    If you have not already seen this:

    I completely agree with his key points:

    * Current oil price collapse is exposing many false claims about shale profitability.

    * Oil price will recover, but investors will forever become more cautious.

    *Drilling pace in shale oil mainly determined by credit availability and cost. With investors being more cautious, drilling activity will become less aggressive .

    I think the “shale revolution” may never really recover from the price collapse. Investors will think twice before putting any money there again. Unless the oil price goes alot higher than 100 $/barrel and stays there for a while.

    • toolpush says:


      Down in the comments, I thought this was very interesting,

      “A quick check indicates that both Whiting and EOG, two of the better shale plays, continue to show negative free cash flow”

      Hard to how a business can keep running on negative cash flow, falling price of its only commodity, and interest rates continuing to rise, if a lender can be found, that is?

    • shallow sand says:

      Freddy. Thanks for the link. Very good article IMO.

  50. FreddyW says:

    Here is another article with interesting information:

    “What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56pc of global GDP is currently supported by zero interest rates, and so are 83pc of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another.

    These are astonishing figures, evidence of a 1930s-style depression, albeit one that is still contained. Nobody knows what will happen as the Fed tries to break out of the stimulus trap, including Fed officials themselves.”

  51. Old farmer mac says:

    I just hope Old Man Business As Usual remains on his feet another ten to twenty which is as long as I can reasonably hope to reside in this Vale of Tears.

    In the meantime Merry Christmas to one and all.

    Some people think Germany’s effort to switch to a mostly renewables based economy has failed but in my estimation the people there will keep their eye on the ball mostly and most of the time and eventually succeed in freeing themselves of the necessity of spending more and more of their income on imported energy.

    I saw an article yesterday that says the fact that consumer electricity prices have doubled in about thirteen years in Germany is proof the transition has failed. That article of course failed to mention how many Germans have jobs in the renewables industries and how much they contribute to the nation’s overall prosperity and security.

    My own electricity rate is up quite a lot over the last thirteen years too without any subsidy to renewables in my case.

  52. Old farmer mac says:

    Chestnut trees don’t have much to do with peak oil in any direct sense but in the broader sense technology of one sort or another is going to be critical in dealing with peak oil in particular and peak resources in general.

    Genetic engineering is here to stay. Nobody is going to put this particular genie back in the bottle.The question is not if but how the GMO industry will be regulated.

    Personally I think the vast majority of the people opposed are abysmally ignorant damned fools and that the remainder are very well informed in respect to what goes onto one side of the balance beam but blind to what should be on the other side of the scale.

    Barbara McClintock discovered jumping genes a LONG time ago. It happens QUITE frequently in nature.

    Now when you hear somebody get all wound up about a particular weed being resistant to a particular weed killer you would think that means the weed is going to take over the universe like something out of a bad scifi movie.

    Well it just does not work that way. The weed still acts and behaves exactly like all other weeds of it’s species except that it has one or two new metabolic pathways that enable it to thrive in the presence of that particular weed killer.

    What this means is that the weed killer is no longer useful. PERIOD except for an incredibly small chance that the weed will suddenly start growing teeth and claws and eating unsuspecting farmers and little doggies that follow rabbits into the field.

    Seriously there is some risk involved in getting out of bed every morning but less than staying there and dieing of a lack of exercise.

    The time is coming when we are going to NEED every little bit of help we can get in managing to grow enough food without using so much energy – and GE has substantial potential to allow me as a farmer to plow less and use less fertilizer and use less pesticides of all sorts as well as less herbicide. It has the potential to reduce ( not eliminate ) frost and drought losses.

    The addition of a wheat gene to the chestnut tree as outlined in this link has the potential to restore THE single most valuable tree species EVER in the eastern US to its former range. This value is ecological as well as commercial and there is a HELL of a lot bigger picture involved than the risk that chestnut trees are going to come sprouting up thru the heat ducts and strangling people.

    This picture involves people rioting and worse due to lack of a way to make a living. We have an army and a navy and an air force not because they are safe. Armys and navies and air forces are demonstrably the most dangerous things ever created by mankind.

    We have them because we are safer with them from others of our kind than without them.

    I respectfully opine that GMO’s will on balance be as big a boon to humanity as shall we say the most dangerous invention ever according to prominent environmentalist AL GORE.

    Now I fully understand if that sneaky snake had not tricked the gullible blond and her boyfriend had not been under the influence of his own little trouser snake he would have better sense than to eat the apple but the snake did and she did and he did and here we are now all seven billion of us infernal combustion engines and all and the question is ”whadda we do now ?”

    Debating spilt milk is no help. The issue is getting thru the bottle neck without going near extinct and taking big chunk of the biosphere with us in the process.

    Genetic engineering of farm and forestry species is going to help a hundred times more than it hurts.

    This is not to say I have any use for the industry in terms of the corporations that own it and their business practices.

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